Matrix metalloproteinases (MMPs), coupled with other proteinases and glycanases, can degrade proteoglycans, collagens, and other extracellular matrix (ECM) components in inflammatory and non-inflammatory arthritis, making them important pathogenic molecules and ideal disease indicators and pharmaceutical intervention triggers. For MMP responsiveness, MMP-sensitive peptides (MSPs) are among the most easily synthesized and cost-effective substrates, with free terminal amine and/or carboxyl groups extensively employed in multiple designs. We hereby provide a comprehensive review over the mechanisms and advances in MSP applications for the management of arthritis. These applications include early and precise diagnosis of MMP activity via fluorescence probe technologies; acting as nanodrug carriers to enable on-demand drug release triggered by pathological microenvironments; and facilitating cartilage engineering through MMP-mediated degradation, which promotes cell migration, matrix synthesis, and tissue integration. Specifically, the ultra-sensitive MSP diagnostic probes could significantly advance the early diagnosis and detection of osteoarthritis (OA), while MSP-based drug carriers for rheumatoid arthritis (RA) can intelligently release anti-inflammatory drugs effectively during flare-ups, or even before symptoms manifest. The continuous progress in MSP development may acceleratedly lead to novel management regimens for arthropathy in the future.