Knee osteoarthritis is a degenerative joint disease, with no fundamental cure beyond pain relief and anti-inflammation. This phase I, multicenter, open-label, dose-escalation trial evaluated the safety, tolerability, and preliminary efficacy of OSCA, an intra-articular injection co-formulation of osiramestrocel (allogeneic mesenchymal stromal cells) and cartilage acellular matrix, in patients with Kellgren-Lawrence (K&L) grade 2 or 3 knee osteoarthritis. Twelve patients received a single intra-articular injection of OSCA at low (2.5 × 10⁷ cells, n = 3), mid (5.0 × 10⁷ cells, n = 3), or high (1.0 × 10⁸ cells, n = 6) doses; cell concentration was 3.3 × 10⁷ cells/ml for all cohorts, and cartilage acellular matrix was 60 mg (40 mg/ml). The primary end point was safety, assessed by dose-limiting toxicities and TEAEs. Secondary end points included Visual Analog Scale (VAS), International Knee Documentation Committee (IKDC), Magnetic Resonance Observation of Cartilage Repair Tissue (MOCART), Whole-Organ Magnetic Resonance Imaging Score (WORMS), and K&L grading over 24 weeks. OSCA was well tolerated, with no dose-limiting toxicities and mild-to-moderate TEAEs in 25.0% (3/12) of patients. At 24 weeks, mid-dose and high-dose groups showed numerically greater improvement in pain and function than the low-dose group (P < 0.05), with up to 91.3% reduction in VAS (P = 0.002) and 102.7% IKDC (P = 0.005). MRI outcomes showed efficacy signals: MOCART total scores improved in 70% of patients, WORMS cartilage integrity improved in 50%, and K&L grades remained stable in 80%. Overall, these findings support the feasibility and tolerability of a single OSCA injection, with exploratory efficacy in both clinical and MRI outcomes.