Knee osteoarthritis (KOA) is characterized by degenerative destruction of knee cartilage. Adipose tissue-derived mesenchymal stem cells (MSCs) have been widely used in the clinic to treat joint diseases, and the exosomes secreted by adipose tissue-derived MSCs (ADSC-Exos) are more stable and easier to store than stem cell therapy alone. The aim of this study was to investigate whether ADSC-Exos could reduce KOA chondrocyte damage and inflammation by activating mitochondrial autophagy. In vitro, we induced a KOA chondrocyte model with lipopolysaccharide (LPS), and after treatment with ADSC-Exos, we assessed chondrocyte damage and inflammation by using HE, Senna O solid green, and Alcian blue staining and IL-1β immunofluorescence analysis. We also labeled chondrocytes and assessed their intracellular levels of reactive oxygen species (ROS) using the DCFH-DA probe, assessed the mitochondrial membrane potential of chondrocytes using a mitochondrial membrane potential detection kit (JC-1). In vivo, we constructed a KOA rat model by anterior cruciate ligament tenotomy (ACLT) surgery, treated the knee joint with a local injection of ADSC-Exos, reconstructed the knee joint in three dimensions using micro-CT, and evaluated the pathological changes in cartilage tissues by using HE, Senna O solid green and alcian blue staining. The in vivo and in vitro results showed that ADSC-Exos upregulated the expression of PINK1/Parkin pathway components, promoted mitochondrial autophagy in chondrocytes, increased the mitochondrial membrane potential, protected mitochondrial function in chondrocytes, and ameliorated the degradation of the cartilage matrix and inflammation during KOA.