Increasing evidence has shown that NLRP3 inflammasome activation participates in chronic aseptic inflammation and is related to tissue fibrosis. Our last study also revealed the vital role of NLRP3 inflammasome, highly associated with tissue hypoxia, in the onset and development of knee osteoarthritis (KOA). In this study, we tried to find a possible benign intervention for that pathological process. Agnuside (AGN), a nontoxic, natural small molecule isolated from the extract of Vitex negundo L. (Verbenaceae), has been demonstrated to have antioxidation, anti-inflammatory, analgesia, and many other properties as an iridoid glycoside, although its specific target is still unclear. Therefore, we established MIA-induced KOA model rats and investigated the effects of AGN oral gavage on oxygen-containing state, NLRP3 inflammasome, synovitis, and fibrosis in KOA. Pimonidazole staining and HIF-1α immunohistochemical assay both showed that AGN at the oral dose of 6.25 mg/kg can effectively relieve local hypoxia in synovial tissue. Besides, we observed a decrease of HIF-1α, caspase-1, ASC, and NLRP3 after AGN intervention, both in the mRNA and protein levels. In addition, rats treated with the AGN showed less inflammatory reaction and fibrosis, not only in the expression of NLRP3, inflammasome downstream factors IL-1β and IL-18, and fibrosis markers TGF-β, TIMP1, and VEGF but also in the observation of HE staining, anatomical characteristics, Sirius Red staining, and type I collagen immunohistochemistry. Subsequently, we established LPS-induced models of fibroblast-like synoviocytes (FLSs) mimicking the inflammatory environment of KOA and activating NLRP3 inflammasome. FLSs treated with AGN (3 μM) resulted in a downregulation of HIF-1α and the components required for NLRP3 inflammasome activation. Meanwhile, the content of proinflammatory factors IL-1β and IL-18 in FLS supernatant was also reduced by AGN. In addition, both mRNA and protein levels of the fibrotic markers were significantly decreased after AGN management. To conclude, this study demonstrates that AGN alleviates synovitis and fibrosis in experimental KOA through the inhibition of HIF-1α accumulation and NLRP3 inflammasome activation. Additionally, not only does it reveal some novel targets for anti-inflammatory and antioxidant effects of AGN but also announces its potential value in treating KOA in humans.