We sought to determine the cartilage repair capacity of WIN-34B in the collagenase-induced osteoarthritis rabbit model and in progenitor cells from subchondral bone. The cartilage protective effect of WIN-34B was measured by clinical and histological scores, cartilage area, and proteoglycan and collagen contents in the collagenase-induced osteoarthritis rabbit model. The efficacy of chondrogenic differentiation of WIN-34B was assessed by expression of CD105, CD73, type II collagen, and aggrecan in vivo and was analyzed by the surface markers of progenitor cells, the mRNA levels of chondrogenic marker genes, and the level of proteoglycan, GAG, and type II collagen in vitro. Oral administration of WIN-34B significantly increased cartilage area, and this was associated with the recovery of proteoglycan and collagen content. Moreover, WIN-34B at 200 mg/kg significantly increased the expression of CD105, CD73, type II collagen, and aggrecan compared to the vehicle group. WIN-34B markedly enhanced the chondrogenic differentiation of CD105 and type II collagen in the progenitor cells from subchondral bone. Also, we confirmed that treatment with WIN-34B strongly increased the number of SH-2(CD105) cells and expression type II collagen in subchondral progenitor cells. Moreover, WIN-34B significantly increased proteoglycan, as measured by alcian blue staining; the mRNA level of type II α 1 collagen, cartilage link protein, and aggrecan; and the inhibition of cartilage matrix molecules, such as GAG and type II collagen, in IL-1 β -treated progenitor cells. These findings suggest that WIN-34B could be a potential candidate for effective anti-osteoarthritic therapy with cartilage repair as well as cartilage protection via enhancement of chondrogenic differentiation in the collagenase-induced osteoarthritis rabbit model and progenitor cells from subchondral bone.