Leflunomide is an immunomodulatory agent used for the treatment of rheumatoid arthritis (RA). Leflunomide known as a regulator of iNOS synthesis which largely decreases NO production in diverse cell type. However, the effect of leflunomide on chondrocyte is still poorly understood. In our previous studies, we have shown that direct production of Nitric oxide (NO) by treating chondrocytes with NO donor, sodium nitroprusside (SNP), causes apoptosis via p38 mitogen-activated protein kinase in association with elevation of p53 protein level, caspase-3 activation. In this study, we characterized the molecular mechanism by which A77 1726 inhibit apoptosis. We found that A77 1726 inhibit NO-induced apoptosis as determined by MTT (Thiazolyl Blue Tetrazolium Bromide) assay and DNA fragmentation. The inhibition of apoptosis by A77 1726 was accompanied by increased PI-3 kinase and AKT activities. So, inhibition of phosphatidylinositol (PI)-3kinase with LY294002 rescued apoptosis. Triciribine, the specific inhibitor of AKT, also abolished anti-apoptotic effect. Our results indicate that A77 1726, the active metabolite of leflunomide, mediates NO-induced apoptosis in chondrocytes by modulating up-regulation of PI-3 kinase and AKT.