Osteoarthritis (OA) is characterized by progressive cartilage destruction and synovitis; however, there are no approved disease-modifying OA drugs. Krill oil (KO) has been reported to possess anti-inflammatory properties and alleviate joint pain in knee OA, indicating its potential to target the inflammatory mechanism of OA. Therefore, the anti-OA effects of KO were investigated in primary chondrocytes and a surgical rat model of knee OA. The oral administration of KO at 200 and 100 mg/kg for 8 weeks improved joint swelling and mobility in the animal model and led to increased bone mineral density and compressive strength in the cartilage. The oral KO doses upregulated chondrogenic genes (type 2 collagen, aggrecan, and Sox9), with inhibition of inflammation markers (5-lipoxygenase and prostaglandin E2) and extracellular matrix (ECM)-degrading enzymes (MMP-2 and MMP-9) in the cartilage and synovium. Consistently, KO treatments increased the viability of chondrocytes exposed to interleukin 1α, accompanied by the upregulation of the chondrogenic genes and the inhibition of the ECM-degrading enzymes. Furthermore, KO demonstrated inhibitory effects on lipopolysaccharide-induced chondrocyte inflammation. Histopathological and immunohistochemical analyses revealed that KO improved joint destruction and synovial inflammation, probably due to the anti-inflammatory, anti-apoptotic, and chondrogenic effects. These findings suggest the therapeutic potential of KO for knee OA.