More than two decades of research has revealed a combination of proteases that determine cartilage degradation in osteoarthritis. These include metalloproteinases, which degrade the major macromolecules in cartilage, aggrecan and type II collagen, serine proteases, and cysteine proteases, for example cathepsin K. This review summarizes the function of proteases in osteoarthritis progression, as revealed by studies of genetically engineered mouse models. A brief overview of the biochemical characteristics and features of several important proteases is provided, with the objective of increasing understanding of their function. Published data reveal at least three enzymes to be major targets for osteoarthritis drug development: ADAMTS-5, MMP-13, and cathepsin K. In surgical models of osteoarthritis, mice lacking these enzymes are protected from cartilage damage and, to varying degrees, from bone changes. In-vivo studies targeting these proteases with selective small-molecule inhibitors have been performed for a variety of animal models. Mouse models will provide opportunities for future tests of the therapeutic effect of protease inhibitors, both on progression of structural damage to the joint and on associated pain.