Reactive oxygen species (ROS) are implicated in induction of inflammatory response and cartilage degradation in osteoarthritis (OA). Melatonin has been shown to improve the chondrogenic differentiation and promote cartilage matrix synthesis in mesenchymal stem cells. However, the underlying mechanisms of melatonin-regulated antioxidant activity in OA cartilage are not known. The aim of this study was to explore the effect of melatonin on nuclear factor-erythroid 2-related factor 2 (NRF2), a key antioxidant transcription factor, and its target antioxidant genes in early-stage OA cartilage. Primary chondrocytes were isolated from rats with surgically induced OA. In vitro treatment of melatonin significantly increased cartilage matrix synthesis and upregulated antioxidant enzymes, mainly heme oxygenase 1 (HO-1), while decreasing matrix degradation enzymes and intracellular ROS. In vivo intraarticular injection of melatonin effectively ameliorated cartilage degeneration in an experimental rat OA model. Inhibition of melatonin membrane receptors by Luzindole or 4-P-PDOT reversed the beneficial effects of melatonin on cartilage matrix synthesis, implying that melatonin receptor-mediated pathway is involved in its anti-arthritic effects. Interestingly, melatonin showed no significant effect on the mRNA level of Nrf2 but significantly increased its protein level. Silencing of Nrf2 or HO-1 expression abolished the protective effects of melatonin, as shown by increased ROS levels and matrix degradation enzyme expression. Microarray assays revealed that miR-146a, a predicted target for Nrf2, was significantly upregulated in OA chondrocytes but was markedly reduced by melatonin treatment. Overexpression of miR-146a diminished the protective effects of melatonin by inhibiting NRF2 expression and aggravating OA-induced cartilage degradation. These findings demonstrate that melatonin supports the anabolic metabolism of cartilage matrix in OA chondrocytes by enhancing the protein levels of NRF2 via suppressing miR-146a. Melatonin-mediated activation of the NRF2/HO-1 axis prevents cartilage degeneration and represents a promising therapeutic target for treatment of early-stage OA.