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Abstract Background Osteoarthritis (OA), a prevalent degenerative disease characterized by degradation of extracellular matrix (ECM), still lacks effective disease-modifying therapy. Mesenchymal stem cells (MSCs) transplantation has been regarded as the most promising approach for OA treatment while engrafting cells alone might not be adequate for effective regeneration. Genetic modification has been used to optimize MSC-based therapy; however, there are still significant limitations that prevent the clinical translation of this therapy including low efficacy and safety concerns. Recently, chemically modified mRNA (modRNA) represents a promising alternative for the gene-enhanced MSC therapy. In this regard, we hypothesized that adipose derived stem cells (ADSCs) engineered with modRNA encoding insulin-like growth factor 1 (IGF-1) were superior to native ADSCs on ameliorating OA development. Methods Mouse ADSCs were acquired from adipose tissue and transfected with modRNAs. First, the kinetics and efficacy of modRNA-mediated gene transfer in mouse ADSCs were analyzed in vitro. Next, we applied an indirect co-culture system to analyze the pro-anabolic potential of IGF-1 modRNA engineered ADSCs (named as IGF-1-ADSCs) on chondrocytes. Finally, we evaluated the cell retention and chondroprotective effect of IGF-1-ADSCs in vivo using fluorescent labeling, histology and immunohistochemistry. Results modRNA transfected mouse ADSCs with high efficiency (85 ± 5%) and the IGF-1 modRNA-transfected ADSCs facilitated burst-like production of bio-functional IGF-1 protein. In vitro, IGF-1-ADSCs induced increased anabolic markers expression of chondrocytes in inflammation environment compared to untreated ADSCs. In a murine OA model, histological and immunohistochemical analysis of knee joints harvested at 4 weeks and 8 weeks after OA induction suggested IGF-1-ADSCs had superior therapeutic effect over native ADSCs demonstrated by lower histological OARSI score and decreased loss of cartilage ECM. Conclusions These findings collectively supported the therapeutic potential of IGF-1-ADSCs for clinical OA management and cartilage repair.