Objective We previously demonstrated that carboxypeptidase B (CPB) protects against joint erosion in rheumatoid arthritis by inactivating complement component C5a. We also found that levels of CPB are abnormally high in the synovial fluid of individuals with another joint disease, osteoarthritis (OA). We undertook this study to investigate whether CPB plays a role in the pathogenesis of OA. Methods We compared the development of OA in CPB-deficient (Cpb2–/–) mice and wild-type mice by subjecting them to medial meniscectomy and histologically assessing cartilage damage, osteophyte formation, and synovitis in the stifle joints 4 months later. We measured levels of proCPB, proinflammatory cytokines, and complement components in synovial fluid samples from patients with symptomatic and radiographic knee OA. Finally, we used enzyme-linked immunosorbent assay, flow cytometry, and hemolytic assays to assess the effect of CPB on formation of membrane attack complex (MAC)–a complement effector critical to OA pathogenesis. Results Cpb2–/– mice developed dramatically greater cartilage damage than did wild-type mice (P < 0.01) and had a greater number of osteophytes (P < 0.05) and a greater degree of synovitis (P < 0.05). In synovial fluid samples from OA patients, high levels of proCPB were associated with high levels of proinflammatory cytokines and complement components, and levels of proCPB correlated positively with those of MAC. In in vitro complement activation assays, activated CPB suppressed the formation of MAC as well as MAC-induced hemolysis. Conclusion Our data suggest that CPB protects against inflammatory destruction of the joints in OA, at least in part by inhibiting complement activation.