G-CSF-mobilized peripheral blood stem cells (gm-PBSCs) offer a convenient cell source for treatment of hematopoietic and vascular disorders. Whether gm-PBSCs provide beneficial effects on skeleton diseases, such as osteoarthritis (OA), remains unknown. This study was undertaken to address the hypothesis that gm-PBSCs promote articular regeneration in OA. Here we studied the effect of single-dose intra-articular injection of gm-PBSCs from male donors delivered in hyaluronic acid (HA) on papain-induced OA in the knee joints of female Sprague-Dawley (SD) rats. Contralateral OA knee joints received single-dose HA alone and served as vehicle controls. We evaluated the histologic changes in glycosaminoglycan, type II collagen, type X collagen, modified Mankin score, and cell apoptosis rate in the articular cartilage of rat knees. We demonstrated that gm-PBSCs were mobilized to the peripheral blood via G-CSF infusion for 5 days in SD rats with increasing CD34(+) percentage up to 55-fold. We showed that gm-PBSCs inhibit progression of papain-induced OA via reducing articular surface irregularity, fibrillation, and erosion, preventing cellular necrosis and loss of chondrogenic proteins, such as glycosaminoglycan and type II collagen, at both 3 and 6 weeks after treatment. Moreover, gm-PBSCs reduced modified Mankin scores and cellular apoptosis rates compared with HA alone. Our findings demonstrate that HA plus gm-PBSCs, rather than HA alone, inhibits progression of OA in rats in vivo. Thus, intra-articular injection of gm-PBSCs is a convenient protocol for treating OA with consistent beneficial effects.