Objective This study was conducted to investigate the effect of long non-coding RNA (lncRNA) Gm37494 on osteoarthritis (OA) and its related molecular mechanism. Methods The cartilage tissues were obtained from OA patients, and an OA mouse model was induced by the destabilization of the medial meniscus, followed by measurement of Gm37494, microRNA (miR)-181a-5p, GABRA1 mRNA, and the encoded GABAARα1 protein expression. Thereafter, a cellular model was induced by interleukin-1β (IL-1β) treatment in chondrocytes, followed by ectopic and silencing experiments. Chondrocyte proliferation was detected by CCK-8 and EdU assays, chondrocyte apoptosis by flow cytometry and western blot, and the levels of inflammatory factors by ELISA. The binding of Gm37494 to miR-181a-5p was evaluated by dual-luciferase reporter gene and RIP assays, and that of GABRA1 to miR-181a-5p by dual-luciferase reporter gene and RNA pull-down assays. Results OA patients and mice had decreased GABRA1 mRNA and GABAARα1 protein levels and elevated miR-181a-5p expression in cartilage tissues. Additionally, Gm37494 was poorly expressed in OA mice. Mechanistically, Gm37494 directly bound to and inversely modulated miR-181a-5p that negatively targeted GABRA1. In IL-1β-induced chondrocytes, Gm37494 overexpression enhanced cell proliferation and suppressed cell apoptosis and inflammation, whereas further miR-181a-5p up-regulation or GABRA1 silencing abolished these trends. Conclusions Conclusively, Gm37494 elevated GABRA1 expression by binding to miR-181a-5p, thus ameliorating OA-induced chondrocyte damage.