Post-traumatic osteoarthritis (PTOA) is a major cause which hinders patients from the recovery after intra-articular injuries or surgeries. Currently, no effective treatment is available. In this study, we showed that inhibition of the acute stage chondrocyte death is a promising strategy to mitigate the development of PTOA. Namely, we examined efficacies of Kyoto University Substance (KUS) 121, a valosin-containing protein modulator, for PTOA as well as its therapeutic mechanisms. In vivo, in a rat PTOA model by cyclic compressive loading, intra-articular treatments of KUS121 significantly improved the modified Mankin scores and reduced damaged-cartilage volumes, as compared to vehicle treatment. Moreover, KUS121 markedly reduced the numbers of TUNEL-, CHOP-, MMP-13-, and ADAMTS-5-positive chondrocytes in the damaged knees. In vitro, KUS121 rescued human articular chondrocytes from tunicamycin-induced cell death, in both monolayer culture and cartilage explants. It also significantly downregulated the protein or gene expression of ER stress markers, proinflammatory cytokines, and extracellular-matrix-degrading enzymes induced by tunicamycin or IL-1β. Collectively, these results demonstrated that KUS121 protected chondrocytes from cell death through the inhibition of excessive ER stress. Therefore, KUS121 would be a new, promising therapeutic agent with a protective effect on the progression of PTOA.