The object of this study was to assess the efficacy of Polycan from Aureobasidium pullulans SM-2001, which is composed mostly of beta-1,3-1,6-glucan, on osteoarthritis (OA)-induced by anterior cruciate ligament transection and partial medial meniscectomy (ACLT&PMM). Three different dosages of Polycan (85, 42.5, and 21.25 mg/kg) were orally administered once a day for 84 days to male rats a week after ACLT&PMM surgery. Changes in the circumference and maximum extension angle of each knee, and in cartilage histopathology were assessed using Mankin scores 12 weeks after Polycan administration. In addition, cartilage proliferation was evaluated using bromodeoxyuridine (BrdU). As the result of ACLT&PMM, classic OA was induced with increases in maximum extension angles, edematous knees changes, and capsule thickness, as well as decreases in chondrocyte proliferation, cartilages degenerative changes, and loss of articular cartilage. However, these changes (except for capsule thickness) were markedly inhibited in all Polycan- and diclofenac sodium-treated groups compared with OA control. Although diclofenac sodium did not influence BrdU uptake, BrdU-immunoreactive cells were increased with all dosages of Polycan, which means that Polycan treatment induced proliferation of chondrocytes in the surface articular cartilage of the tibia and femur. The results obtained in this study suggest that 84 days of continuous oral treatment of three different dosages of Polycan led to lesser degrees of articular stiffness and histological cartilage damage compared with OA controls 91 days after OA inducement, suggesting that the optimal Polycan dosage to treat OA is 42.5 mg/kg based on the present study.