AIF has been formulated using three herbs known to have anti-inflammatory and anti-osteolytic effects. In this study, the potential therapeutic effects of AIF for osteoarthritis were assessed in vitro and in vivo. The effects of AIF on the cartilage and bone protection (MMP-13 expression, GAG degradation, OPG release) were examined, in vitro. In addition, the therapeutic effect of AIF was evaluated using a chemical-induced osteoarthritis rat model. Rats were injected with iodoacetate intraarticularly in one knee joint and treated with the oral administration of 100 mg/kg AIF-glucosamine once a day for 3 weeks. And then, destruction of cartilage and bone was evaluated by histopathological assessment. AIF significantly inhibited the production of MMP13 and GAG in a dose dependent manner in vitro. Also, AIF increased the production of OPG. In OA rat model, the AIF-glucosamine treated group reduced cartilage destruction, compared to vehicle or glucosamine treated group. AIF showed potent protective effects for the destruction of cartilage and bone, in vitro and in vivo. These results suggest that AIF contains effective compound(s) which may modify the progression of arthritis.