In the present study, the effects and mechanisms of mesenchymal stem cells (MSCs) on interleukin (IL)-1β-stimulated rat chondrocytes, as well as cartilage from a rat model of osteoarthritis (OA) induced by anterior cruciate ligament transection and medial meniscectomy were investigated. Confluent rat chondrocytes were treated with IL-1β (10 ng/ml), then cultured indirectly with or without MSCs at a ratio of 2:1. Total RNA and protein were collected at various time-points, and western blot and reverse transcription-quantitative polymerase chain reaction analyses were used to investigate the expression of type II collagen (Col2), aggrecan, matrix metalloproteinase-13 (MMP-13) and cyclooxygenase-2 (COX-2). The activation of extracellular signal-regulated kinases 1/2 (ERK1/2), c-Jun N-terminal kinase (JNK), p38 mitogen-activated protein kinase (MAPK), nuclear factor-κB (NF-κB) p65 and inhibitory-κ-B-α (IκBα) were also assessed by western blotting. In addition, the in vivo effects of MSCs in a rat OA model were assessed by histology and western blot analysis. The results indicated that in vitro, IL-1β markedly upregulated the expression of MMP-13, COX-2, phosphorylated ERK1/2, JNK, p38 MAPK and NF-κB p65, and inhibited the expression of Col2, aggrecan and IκBα. Conversely, MSCs enhanced the expression of Col2, aggrecan and IκBα, and inhibited the expression of MMP-13 and NF-κB p65 in IL-1β-stimulated rat chondrocytes. In vivo histological and western blot analyses revealed analogous results to the in vitro findings. The results of the present study demonstrated that MSCs suppressed the inflammatory response and extracellular matrix degradation in IL-1β‑induced rat chondrocytes, as well as cartilage in a osteoarthritic rat model, in part via the NF-κB signaling pathway.