Objective. To observe the effects of traditional Chinese moxibustion, compared with sham moxibustion, on the quality of life (QOL) in patients with chronic knee osteoarthritis (KOA). Methods. This is a randomized double-blinded, placebo-controlled trial. 150 patients with KOA were randomly allocated to either a true moxibustion treatment (n = 77) or a sham moxibustion treatment (n = 73) three times a week for six weeks. The QOL of patients was evaluated with SF-36 at baseline and 3, 6, and 12 weeks after baseline. Results. 136 patients were available for analysis. Participants in the true moxibustion group experienced statistically significantly greater improvement in GH (general health) scores than the sham group at week 6 (P = 0.015) and week 12 (P = 0.029). Participants in the true moxibustion group experienced statistically significantly greater improvement in VT (vitality) scores than the sham group at week 12 (P = 0.042). No significant adverse effects were found during the trial. Conclusion. A 6-week moxibustion treatment seems to improve general health and vitality, which are associated with physical and mental quality of life, in patients with KOA up to 12 weeks, relative to credible sham moxibustion. This trial is registered with Clinicaltrials.gov ISRCTN68475405.