Recent advances in instrumentation and a growing understanding of the pathophysiology of osteoarthritis have led to increased use of arthroscopy for the management of degenerative arthritis of the knee. Techniques include lavage and débridement, abrasion arthroplasty, subchondral penetration procedures (drilling and microfracture), and laser/thermal chondroplasty. In most patients, short-term symptomatic relief can be expected with arthroscopic lavage and débridement. Greater symptomatic relief and more persistent pain relief can be achieved in patients who have acute onset of pain, mechanical disturbances from cartilage or meniscal fragments, normal lower extremity alignment, and minimal radiographic evidence of degenerative disease. Arthroscopic chondroplasty techniques provide unpredictable results. Concerns include the durability of the fibrocartilage repair tissue in subchondral penetration procedures and thermal damage to subchondral bone and adjacent normal articular cartilage in laser/thermal chondroplasty. Although recent prospective, randomized, double-blinded studies have demonstrated that outcomes after arthroscopic lavage or débridement were no better than placebo procedure for knee osteoarthritis, controversy still exists. With proper selection, patients with early degenerative arthritis and mechanical symptoms of locking or catching can benefit from arthroscopic surgery.