Articular cartilage may regenerate poorly after injury or during aging. In vitro, farnesol can modulate extracellular matrix synthesis and restore chondrocyte phenotypes by increasing type II collagen (COL II) and glycosaminoglycan (GAG) production. Here, we evaluated farnesol's preventive and reparative effects against osteoarthritis (OA) in vivo. We induced OA in rabbits through resection of the lateral collateral ligament and meniscus. After 2 weeks, the affected limb was treated with 0.5 ml of 0.4 mM farnesol, hyaluronan (HA) nanoparticle-encapsulated 0.8 mM farnesol (Farn/HA), or HA nanoparticles intra-articularly. After 2 and 6 treatment weeks, synovial inflammatory cytokine levels were analyzed. We also removed the entire joint cartilage from lateral femoral condyles for histological investigation. The half-maximum inhibitory concentration of farnesol was 0.5 mM. Farn/HA had relatively low cytotoxicity showing cells remained viable after being treated with 1 mM a concentration Farn/HA. Untreated lateral condyle exhibited extensive wear. By contrast, 0.4 mM farnesol or 0.8 mM Farn/HA led to a relatively transparent and bright appearance. After 2 and 6 treatment weeks, farnesol, particularly 0.8 mM Farn/HA, reduced matrix metalloproteinase 1 and 13 levels considerably. Therefore, 0.8 mM Farn/HA, which enabled slow drug release, demonstrated the highest anti-inflammatory and OA preventive effects. After 6 treatment weeks, farnesol also promoted COL II and GAG synthesis and, thus, aided healing.