The purpose of our study was to elucidate the role of the histone methyltransferase enhancer of zeste homologue 2 (EZH2) in the pathophysiology of osteoarthritis (OA) and to develop a strategy to modulate EZH2 activity for OA treatment. The expression of EZH2 in normal and OA human cartilage was compared by western blotting. The effect of EZH2 overexpression and inhibition on chondrocyte hypertrophy related gene expression was examined by real-time PCR, and histone methylation on the promoter of the Wnt inhibitor SFRP1 was analyzed using a chromatin immunoprecipitation (ChIP) PCR. Histological assessment of OA mice joint was carried out to assess the in vivo effects of EZH2 inhibitor EPZ005687. We found EZH2 level was significantly increased in the chondrocytes of OA patients compared to normal humans. Overexpression of EZH2 promoted Indian Hedgehog, MMP-13, ADAMTS-5 and COLX expression, while inhibition of EZH2 reversed this trend. Furthermore, the induction of EZH2 led to β-catenin signaling activation by increasing H3K27me3 on the promoter of SFRP1, while the inhibition of EZH2 silenced β-catenin signaling. Finally, intraarticular injection of EPZ005687 delayed OA development in mice. These results implicated EZH2 activity in OA development. Pharmacological inhibition of EZH2 may be an effective therapeutic approach for osteoarthritis.