Osteoarthritis (OA) most frequently affects the knee joint and is associated with an elevated expression of cytokines and extracellular cartilage matrix (ECM), degrading enzymes such as matrix metalloproteinases (MMPs). Differences in gene expression of the intra-articularly located infrapatellar fat pad (IPFP) and other fatty tissue suggest its autonomous function, yet its role in OA pathogenesis remains unknown. Human IPFPs and articular cartilage were collected from OA patients undergoing total knee arthroplasty, and biopsies from the IPFP of healthy patients harvested during knee arthroscopy served as controls (CO). Isolated chondrocytes were co-cultured with either osteoarthritic (OA) or CO-IPFPs in a transwell system. Chondrocyte expression of MMP1, -3, -13, type 1 and 2 collagens, interleukin IL1β, IL6, IL10, and tumor necrosis factor TNFα was analyzed by RTD-PCR at day 0 and day 2, and TNFα secretion was analyzed by ELISA. The cytokine release in IPFPs was assessed by an array. Results: Both IPFPs (CO, OA) significantly reduced the expression of type 2 collagen and TNFα in chondrocytes. On the other hand, only CO-IPFP suppressed the expression of type 1 collagen and significantly induced the MMP13 expression. On the contrary, IL1β and IL6 were significantly induced when exposed to OA-IPFP. Conclusions: The partial loss of the suppressive effect on type 1 collagen gene expression found for OA-IPFP shows the pathological remodeling and dedifferentiation potential of the OA-IPFP on the chondrocytes. However, the significant suppression of TNFα implies that the OA- and CO-IPFP could also exhibit a protective role in the knee joint, preventing the progress of inflammation.