Olfactory-ensheathing cells (OECs) are known for their role in neuronal regeneration and potential to promote tissue repair. Adipose-derived stem cells (ADSCs), characterized by mesenchymal stem cell (MSC) traits, display a fibroblast-like morphology and express MSC surface markers, making them suitable for regenerative therapies for osteoarthritis (OA). In this study, OECs and ADSCs were derived from tissues and characterized for their morphology, surface marker expression, and differentiation capabilities. Collagenase-induced OA was created in 10-week-old C57BL/6 mice, followed by intra-articular injections of ADSCs (1 × 105), OECs (1 × 105), or a higher dose of OECs (5 × 105). Therapeutic efficacy was evaluated using rotarod performance tests, MRI, histology, and immunohistochemistry. Both cell types exhibited typical MSC characteristics and successfully differentiated into adipocytes, osteoblasts, and chondrocytes, confirmed by gene expression and staining. Transplantation significantly improved rotarod performance and preserved cartilage integrity, as seen in MRI and histology, with reduced cartilage destruction and increased chondrocytes. Immunohistochemistry showed elevated type II collagen and aggrecan in treated joints, indicating hyaline cartilage formation, and reduced MMP13 and IL-1β expression, suggesting decreased inflammation and catabolic activity. These findings highlight the regenerative potential of OECs and ADSCs in treating OA by preserving cartilage, promoting chondrocyte proliferation, and reducing inflammation. Further research is needed to optimize delivery methods and evaluate long-term clinical outcomes.