Previous studies have shown that Tougu Xiaotong capsule (TGXTC) has therapeutic effects on knee osteoarthritis (OA) through multiple targets. However, the mechanisms of action underlying its regulation of subchondral bone reconstruction remain unclear. In this study, we investigated the effects of TGXTC on subchondral bone remodeling. Eighteen six-month-old New Zealand white rabbits of average sex were randomly divided into the normal, model and TGXTC groups. The rabbit knee OA model was induced by a modified Hulth's method in the model and TGXTC groups, but not the normal group. Five weeks postoperatively, intragastric administration of TGXTC was performed for four weeks. After drug administration, the medial femoral condyle and tibia were prepared for observation of cartilage histology via optical microscopy and micro-computed tomography, the serum was collected for biochemical parameters assay and the subchondral bone isolated from the lateral femoral condyle was collected for detection of IL-1β and TNF-α mRNA and protein by reverse transcription-quantitative polymerase chain reaction and western blot analysis, respectively. The results showed that treatment with TGXTC significantly mitigated cartilage injury and subchondral bone damage, improved the parameter of subchondral trabecular bone, decreased alkaline phosphatase and tartrate-resistant acid phosphatase activity, and significantly reducing the osteoprotegerin/receptor activator of nuclear factor-κB ligand ratio, reduced the expression of IL-1β and TNF-α mRNA and protein. These results suggest that TGXTC could delay the pathological development of OA by regulating subchondral bone remodeling through regulation of bone formation and bone resorption and its relating inflammatory factors, and this may partly explain its clinical efficacy in the treatment of knee OA.