To compare the effectiveness of ultrasound-guided genicular nerve block (GNB) and physical therapy (PT) in patients with chronic knee osteoarthritis. A prospective randomised study with 102 patients (45-70 years) was performed wherein the patients received ultrasound-guided GNB (n = 51) and PT (n = 51) along with a standard home exercise programme. Scores for pain on a Visual Analogue Scale (VAS), Western Ontario and McMaster Universities Osteoarthritis Index (WOMAC) and 6-min walking test (6MWT) were assessed pre-treatment and at 2- and 12-weeks post-treatment. Both groups were comparable for sociodemographic characteristics. VAS scores (in mm) in the ultrasound-guided GNB group at 0, 2 and 12 weeks were 7.01 ± 1.36; 3.71 ± 2.18; 5.08 ± 2.22 (p < 0.001) and 6.64 ± 1.99; 4.35 ± 1.09; 5.25 ± 1.33, (p < 0.001) in the PT group. While the increase in the 6MWT test in the 2nd week was similar for both groups (p = 0.073), the increase in walking distance was greater in the ultrasound-guided GNB group at 12 weeks (p = 0.046). As compared to PT, ultrasound-guided GNB is beneficial in reducing pain and increasing functional and physical capacity, with greater retention of effects on the physical capacity seen at 12 weeks. Trial registration number: ClinicalTrials.gov (NCT04782401).