Osteoarthritis (OA) is a common degenerative disease that can lead to severe joint pain and loss of function, seriously threatening the health and normal life of patients. At present, the pathogenesis of OA remains to be clarified. Recent studies have shown that fatty acid-binding protein 4 (FABP4) is increased in the plasma and synovial fluid of patients with OA. However, the effect of FABP4 on OA is unclear. The present study established IL-1β-induced ATDC5 cells with FABP4 knockdown. Next, cell viability was detected with Cell Counting Kit-8 assay. The content of inflammatory factors, prostaglandin E2 and glycosaminoglycan (GAG) was detected via ELISA. The levels of reactive oxygen species (ROS) and superoxide dismutase (SOD) in cells were detected by using ROS and SOD kits, respectively. TUNEL staining was used to detect the apoptosis level. Western blotting was used to detect the expression levels of proteins. The results revealed that FABP4 was upregulated in IL-1β-induced ATDC5 cells. Knockdown of FABP4 increased cell viability, reduced inflammatory damage, oxidative stress and apoptosis in IL-1β-induced ATDC5 cells. Following FABP4 knockdown, the expression of matrix metalloproteinases (MMP3, MMP9 and MMP13) of IL-1β-induced ATDC5 cells was reduced, and the expression of GAG was promoted. FABP4 knockdown also inhibited the expression of NF-κB p65 and enhanced peroxisome proliferator-activated receptor (PPAR)γ expression. However, the presence of PPARγ inhibitor blocked the aforementioned effects of FABP4 on IL-1β-induced ATDC5 cells. In conclusion, FABP4 knockdown suppressed the inflammation, oxidative stress, apoptosis and extracellular matrix degradation of IL-1β-induced chondrocytes by activating PPARγ to inhibit the NF-κB signaling pathway.