Background The fabella is a sesamoid bone usually embedded within the tendon of the lateral head of the gastrocnemius, articulating with the posterior surface of the lateral femoral condyle. Recently, the fabella was associated with primary osteoarthritis. The current study aimed to estimate its incidence and distribution in patients with osteoarthritis in Riyadh, Saudi Arabia, and its effect on disease severity and deformity in osteoarthritic knees. Methods We conducted a retrospective chart review study and included 901 patients with primary knee osteoarthritis between January 2016 and December 2020. All data were retrieved from the hospital data management system using a customized data collection form which included baseline demographics of the patients and specific parameters for the study such as type of knee deformity, Kellgren-Lawrence classification, OA severity, and location of fabella. Results Overall fabella incidence in 901 patients was 21.9% (22.4% in females, 20.1% in males) with no significant difference between sexes (χ² = 0.515, P = 0.473), but was more prevalent among older patients age 50–60 years; prevalence 28.6% (χ² = 11.178, P = 0.025). The Kellgren-Lawrence classification stage was significantly higher in knees with fabella because 117 (59.4%) patients were classified as stage 4 (χ² = 9.694, P = 0.021). Genu varum was the most prevalent deformity occurring concomitantly with fabella in osteoarthritic knees, observed in 122 patients (61.9%). Conclusion The presence of fabella was positively correlated with older age and higher severity of primary osteoarthritis.