To evaluate the efficacy of autologous adipose-derived mesenchymal stem cell (ADMSC) therapy on pain, function and disease modification in knee osteoarthritis. 30 participants with symptomatic knee osteoarthritis were randomized into three groups. Two treatment groups received intra-articular ADMSC therapy consisting of either a single injection (100 × 10 ADMSCs) or two injections (100 × 10 ADMSCs at baseline and 6 months). The third group served as control and continued conservative management. No serious adverse events were observed. Both treatment groups receiving ADMSCs showed clinically significant pain and functional improvement at completion of follow-up at 12 months. Radiological analysis using the Magnetic Resonance Imaging Osteoarthritis Knee Score indicated modification of disease progression. Autologous ADMSC therapy appears to be a safe and effective therapy for knee osteoarthritis and may have the potential to prevent disease progression. Trial registration number: ACTRN12614000814673.