Osteoarthritis (OA) is an urgent public health problem; however, the underlying causal mechanisms remain unclear, especially in terms of inflammatory mediators in cartilage degradation and chondrocyte imbalance. P2X7 receptor (P2X7R) is a critical inflammation switch, but few studies have examined its function and mechanisms in OA-like pyroptotic inflammation of chondrocytes. In this study, Sprague–Dawley rats were injected in the knee with monosodium iodoacetate (MIA) to induce OA, followed by multiple intra-articular injections with P2X7R antagonist A740003, P2X7R agonist BzATP, NF-κB inhibitor Bay 11-7082, and NLRP3 inhibitor CY-09. Primary rat chondrocytes were harvested and treated similarly. We assessed cell viability, damage, and death via cell viability assay, lactate dehydrogenase (LDH) release, and flow cytometry. Concentrations of adenosine triphosphate (ATP) and interleukin- (IL-) 1β in cell culture supernatant and joint cavity lavage fluid were analyzed by enzyme-linked immunosorbent assay. Changes in expression levels of P2X7 and inflammation-related indicators were analyzed by immunofluorescence, quantitative reverse-transcription polymerase chain reaction, and western blotting. Cell morphology changes and pyroptosis were observed using transmission electron microscopy. Histology, immunohistochemistry, and microcomputed tomography were used to analyze damage to bone and cartilage tissues and assess the severity of OA. Similar to MIA, BzATP reduced cell viability and collagen II expression in a dose-dependent manner. Conversely, A740003 ameliorated MIA-induced cartilage degradation and OA-like pyroptotic inflammation by rescuing P2X7, MMP13, NF-κB p65, NLRP3, caspase-1 (TUNEL-positive and active), and IL-1β upregulation. Additionally, A740003 reduced the caspase-1/propidium iodide double-positive rate, LDH concentration, and reactive oxygen species production. These effects also occurred via coincubation with Bay 11-7082 and CY-09. In conclusion, activated P2X7 promoted extracellular matrix degradation and pyroptotic inflammation in OA chondrocytes through NF-κB/NLRP3 crosstalk, thus, aggravating the symptoms of OA. The study findings suggest P2X7 as a potential target for inflammation treatment, providing new avenues for OA research and therapy.