Osteoarthritis (OA) affects nearly 10% of the population of the United States and other industrialized countries and, at present, short of surgical joint replacement, there is no therapy available that can reverse the progression of the disease. Adenosine, acting at its A2A receptor (A2AR), is a critical autocrine factor for maintenance of cartilage homeostasis and here we report that injection of liposomal suspensions of either adenosine or a selective A2AR agonist, CGS21680, significantly reduced oA cartilage damage in a murine model of obesity-induced oA. the same treatment also improved swelling and preserved cartilage in the affected knees in a rat model of established posttraumatic OA (PTOA). Differential expression analysis of mRNA from chondrocytes harvested from knees of rats with PTOA treated with liposomal A2AR agonist revealed downregulation of genes associated with matrix degradation and upregulation of genes associated with cell proliferation as compared to liposomes alone. Studies in vitro and in affected joints demonstrated that A2AR ligation increased the nuclear P-SMAD2/3/P-SMAD1/5/8 ratio, a change associated with repression of terminal chondrocyte differentiation. These results strongly suggest that targeting the A2AR is an effective approach to treat oA. Osteoarthritis (OA) is a common disease affecting 151 million people worldwide and its incidence is expected to increase in industrialized countries due to aging and increased obesity of the population, a condition that together with previous joint injury represent the most common risk factors 1. OA can affect any joint, but most commonly affects the knee, hip and hand. The prevalence of OA is greatest in the knee joint, in both women (47%) and men (40%), and there is no therapy currently available that can reverse or halt the progression of OA 2,3 short of total joint replacement. Total knee replacements are the most common joint surgeries and it has been estimated that there will be a fivefold increase in the number of patients undergoing this surgical procedure up to 3.5 million by 2030 4,5. In search of effective therapies, a number of different approaches have been taken including a focus on both growth factors, such as transforming growth factor-beta (TGFβ), and other molecular pathways involved in regulating cartilage development and homeostasis. TGFβ molecular signaling exerts dual and opposing roles in cartilage and chondrocyte health depending on the receptor and signal activated downstream. It has been shown that inhibition of high levels of systemic TGFβ attenuates anterior cruciate ligament rupture-induced OA in mice by preventing loss of proteoglycan from the cartilage and protecting the subchondral bone from structural alteration 6. Moreover, the effect of TGFβ on joint health depends on which receptor it binds. Activation of