Using the Pond-Nuki procedure, osteoarthritis was induced in 26 crossbred dogs. Their right knees were subjected to anterior cruciate ligament sectioning, and their left knees received a sham operation. The unoperated knees of 7 additional dogs served as controls. Cartilage and synovial membranes were excised 2, 4, and 8 weeks after surgery. Collagenolytic activity, determined by direct tissue assay, was higher at all times tested in osteoarthritic cartilage and synovia than in sham operated and control specimens. The increased collagenolytic activity of the cartilage did not correlate with the collagenolytic activity of the synovium, but it did correlate (r = 0.57) with the degree of synovial inflammation, which was graded histologically. Treatment for 4 weeks with prednisone (0.20-0.25 mg/kg/day) blocked the increased collagenolytic activity of the cartilage. Our results indicate that stimulating factors may, but collagenolytic enzymes probably to not, diffuse from the synovium to the cartilage and modulate tissue breakdown. Prednisone may also suppress cartilage breakdown by either acting at the level of the synthesis or by acting on the release/action of the stimulating factors.