Osteoarthritis (OA) is characterized by progressive cartilage degeneration with increasing prevalence and unsatisfactory treatment efficacy. Exosomes derived from mesenchymal stem cells play an important role in alleviating OA by promoting cartilage regeneration, inhibiting synovial inflammation and mediating subchondral bone remodeling without the risk of immune rejection and tumorigenesis. However, low yield, weak activity, inefficient targeting ability and unpredictable side effects of natural exosomes have limited their clinical application. At present, various approaches have been applied in exosome engineering to regulate their production and function, such as pretreatment of parental cells, drug loading, genetic engineering and surface modification. Biomaterials have also been proved to facilitate efficient delivery of exosomes and enhance treatment effectiveness. Here, we summarize the current understanding of the biogenesis, isolation and characterization of natural exosomes, and focus on the large-scale production and preparation of engineered exosomes, as well as their therapeutic potential in OA, thus providing novel insights into exploring advanced MSC-derived exosome-based cell-free therapy for the treatment of OA.