Progranulin (PGRN) is a multifunctional growth factor involved in many physiological processes and disease states. The apparent protective role of PGRN and the importance of chondrocyte autophagic function in the progression of osteoarthritis (OA) led us to investigate the role of PGRN in the regulation of chondrocyte autophagy. PGRN knockout chondrocytes exhibited a deficient autophagic response with limited induction following rapamycin, serum starvation, and IL-1β-induced autophagy. PGRN-mediated anabolism and suppression of IL-1β-induced catabolism were largely abrogated in the presence of the BafA1 autophagy inhibitor. Mechanistically, during the process of OA, PGRN and the ATG5–ATG12 conjugate form a protein complex; PGRN regulates autophagy in chondrocytes and OA through, at least partially, the interactions between PGRN and the ATG5–ATG12 conjugate. Furthermore, the ATG5–ATG12 conjugate is critical for cell proliferation and apoptosis. Knockdown or knockout of ATG5 reduces the expression of ATG5–ATG12 conjugate and inhibits the chondroprotective effect of PGRN on anabolism and catabolism. Overexpression of PGRN partially reversed this effect. In brief, the PGRN-mediated regulation of chondrocyte autophagy plays a key role in the chondroprotective role of PGRN in OA. Such studies provide new insights into the pathogenesis of OA and PGRN-associated autophagy in chondrocyte homeostasis.