Currently there is no effective treatment available for osteoarthritis (OA). We have recently developed Kyoto University Substances (KUSs), ATPase inhibitors specific for valosin-containing protein (VCP), as a novel class of medicine for cellular protection. KUSs suppressed intracellular ATP depletion, endoplasmic reticulum (ER) stress, and cell death. In this study, we investigated the effects of KUS121 on chondrocyte cell death. In cultured chondrocytes differentiated from ATDC5 cells, KUS121 suppressed the decline in ATP levels and apoptotic cell death under stress conditions induced by TNFα. KUS121 ameliorated TNFα-induced reduction of gene expression in chondrocytes, such as Sox9 and Col2α. KUS121 also suppressed ER stress and cell death in chondrocytes under tunicamycin load. Furthermore, intraperitoneal administration of KUS121 in vivo suppressed chondrocyte loss and proteoglycan reduction in knee joints of a monosodium iodoacetate-induced OA rat model. Moreover, intra-articular administration of KUS121 more prominently reduced the apoptosis of the affected chondrocytes. These results demonstrate that KUS121 protects chondrocytes from stress-induced cell death in vitro and in vivo, and indicate that KUS121 is a promising novel therapeutic agent to prevent the progression of OA.