Introduction: Human umbilical cord-derived mesenchymal stem cells (hUC-MSCs) and their small extracellular vesicles (hUC-MSC-sEVs) have shown attractive prospects applying in regenerative medicine. This study aimed to compare the therapeutic effects of two agents on osteoarthritis (OA) and investigate underlying mechanism using proteomics. Methods: In vitro, the proliferation and migration abilities of chondrocytes treated with hUC-MSCs or hUC-MSC-sEVs were detected by Cell Counting Kit-8 assay and scratch wound assay. In vivo, hUC-MSCs (a single dose of 5 × 105) or hUC-MSC-sEVs (30 μg/time) were injected into the knee joints of anterior cruciate ligament transection-induced OA model. Hematoxylin and eosin, Safranin O/Fast Green staining were used to observe cartilage degeneration. The levels of cartilage matrix metabolic molecules (Collagen II, MMP13 and ADAMTS5) and macrophage polarization markers (CD14, IL-1β, IL-10 and CD206) were assessed by immunohistochemistry. Finally, proteomics analysis was performed to characterize the proteinaceous contents of two agents. Results: In vitro data showed that hUC-MSC-sEVs were taken up by chondrocytes. A total of 15 μg/mL of sEVs show the greatest proliferative and migratory capacities among all groups. In the animal study, hUC-MSCs and hUC-MSC-sEVs alleviated cartilage damage. This effect was mediated via maintaining cartilage homeostasis, as was confirmed by upregulation of the COL II and downregulation of the MMP13 and ADAMTS5. Moreover, the M1 macrophage markers (CD14) were significantly reduced, while the M2 macrophage markers (CD206 and IL-10) were increased in the hUC-MSCs and hUC-MSC-sEVs relative to the untreated group. Mechanistically, we found that many proteins connected to cartilage repair were more abundant in sEVs. Notably, compared to hUC-MSCs, the upregulated proteins in sEVs were mostly involved in the regulation of immune effector process, extracellular matrix organization, PI3K-AKT signaling pathways, and Rap1 signaling pathway. Conclusion: Our study indicated that hUC-MSC-sEVs protect cartilage from damage and many cartilage repair-related proteins are probably involved in the restoration process. These data suggest the promising potential of hUC-MSC-sEVs as a therapeutic agent for OA.Keywords: cell-free therapy; human umbilical cord-derived mesenchymal stem cells; osteoarthritis; proteomics; small extracellular vesicles.