The harsh inflammatory environment associated with injured and arthritic joints represents a major challenge to articular cartilage repair. In this study, we report the effect of cerium oxide nanoparticles, or nanoceria, in modulating development of engineered cartilage and in combating the deleterious effects of interleukin-1a. Nanoceria was found to be biocompatible with bovine chondrocytes up to a concentration of 1000 mg/mL (60,000 cells/mg of nanoceria), and its presence significantly improved compressive mechanical properties and biochemical composition (i.e., glycosaminoglycans) of engineered cartilage. Raman microspectroscopy revealed that individual chondrocytes with internalized nanoceria have increased concentrations of proline, procollagen, and glycogen as compared with cells without the nanoparticles in their vicinity. The inflammatory response due to physiologically relevant quantities of interluekin-1a (0.5 ng/mL) is partially inhibited by nanoceria. To the best of the authors' knowledge, these results are the first to demonstrate a high potential for nanoceria to improve articular cartilage tissue properties and for their long-term treatment against an inflammatory reaction.