Osteoarthritis (OA) is a common degenerative joint disease characterized by joint pain and stiffness. In humans, mesenchymal stem cells (MSCs) and derived extracellular vesicles (MSC-EVs) have been reported to alleviate pain in knee OA. Here, we used the destabilization of the medial meniscus (DMM) mouse model of OA to investigate mechanisms by which MSCs and MSC-EVs influence pain-related behavior. We found that MSC and MSC-EV treated DMM mice displayed improved OA pain-related behavior (i.e. locomotion, digging and sleep) compared to untreated DMM mice. Improved behavior was not the result of reduced joint damage, but rather knee-innervating sensory neurons from MSC and MSC-EV treated mice did not display the hyperexcitability observed in untreated DMM mice. Furthermore, we found that MSC-EVs normalize sensory neuron hyperexcitability induced by nerve growth factor in vitro. Our study suggests that MSCs and MSC-EVs may reduce pain in OA by direct action on peripheral sensory neurons.