This study aimed to formulate nanocrystal-polymer particles (NPPs) containing the potent p38α/β MAPK inhibitor PH-797804 (PH-NPPs) and to test their extended-release properties over months in comparison to those of conventional PH microparticles for the intra-articular treatment of inflammatory and mechanistic murine models mirroring aspects of human osteoarthritis (OA). The steps of the study were (i) to formulate PH nanocrystals (wet milling), (ii) to encapsulate a high payload of PH nanocrystals in fluorescent particles (spray drying), (iii) to assess in vitro drug release, (iv) to evaluate PH-NPP toxicity to human OA synoviocytes (MTT test), (v) to investigate the in vivo bioactivity of the particles in mice in an inflammatory antigen-induced arthritis (AIA) model (using histology and RT-qPCR) and (vi) to investigate the in vivo bioactivity of the particles in the OA model obtained by mechanistic surgical destabilization of the medial meniscus (DMM) (using histology, micro-CT, and multiplex ELISA). The PH nanocrystals stabilized with vitamin E TPGS had a monomodal size distribution. The PH-NPPs had a mean diameter of 14.2 μm and drug loading of ~31.5% (w/w), and ~20% of the PH was released over 3 months. The NPPs did not exhibit toxicity to cultured human OA synoviocytes at 100 × IC50. Finally, in vivo studies showed good retention of PH-NPPs in the joint and adjacent tissues for up to 2 months, and the PH-NPPs exhibited good functional relevance by significantly reducing inflammation and joint destruction and by inhibiting several biomarkers (e.g., IL-1β). In conclusion, local treatment with PH-NPPs, used as an extended-release drug delivery system, improved inflammation and joint degradation in two distinct mouse models, indicating treatment potential for human OA.