Osteoarthritis (OA), the commonest form of arthritis and a major cause of morbidity, is characterized by progressive degeneration of the articular cartilage. Along with increased production and activation of degradative enzymes, altered synthesis of cartilage matrix molecules and growth factors by resident chondrocytes is believed to play a central role in this pathological process. We used an ovine meniscectomy model of OA to evaluate changes in chondrocyte expression of types I, II and III collagen; aggrecan; the small leucine-rich proteoglycans (SLRPs) biglycan, decorin, lumican and fibromodulin; transforming growth factor-beta; and connective tissue growth factor. Changes were evaluated separately in the medial and lateral tibial plateaux, and were confirmed for selected molecules using immunohistochemistry and Western blotting. Significant changes in mRNA levels were confined to the lateral compartment, where active cartilage degeneration was observed. In this region there was significant upregulation in expession of types I, II and III collagen, aggrecan, biglycan and lumican, concomitant with downregulation of decorin and connective tissue growth factor. The increases in type I and III collagen mRNA were accompanied by increased immunostaining for these proteins in cartilage. The upregulated lumican expression in degenerative cartilage was associated with increased lumican core protein deficient in keratan sulphate side-chains. Furthermore, there was evidence of significant fragmentation of SLRPs in both normal and arthritic tissue, with specific catabolites of biglycan and fibromodulin identified only in the cartilage from meniscectomized joints. This study highlights the focal nature of the degenerative changes that occur in OA cartilage and suggests that altered synthesis and proteolysis of SLRPs may play an important role in cartilage destruction in arthritis.