We undertook this study to investigate the effects and mechanisms of dexamethasone liposome (Dex-Lips) on alleviating destabilization of the medial meniscus (DMM)-induced osteoarthritis (OA) in miR-204/-211-deficient mice. Dex-Lips was prepared by the thin-film hydration method. The characterization of Dex-Lips was identified by the mean size, zeta potential, drug loading, and encapsulation efficiencies. Experimental OA was established by DMM surgery in miR-204/-211-deficient mice, and then Dex-Lips was treated once a week for 3 months. Von Frey filaments was used to perform the pain test. The inflammation level was evaluated with quantitative real-time polymerase chain reaction and enzyme-linked immunosorbent assay. Polarization of macrophages was evaluated by immunofluorescent staining. X-ray, micro-CT scanning, and histological observations were conducted in vivo on DMM mice to describe the OA phenotype. We found that miR-204/-211-deficient mice displayed more severe OA symptoms than WT mice after DMM surgery. Dex-Lips ameliorated DMM-induced OA phenotype and suppressed pain and inflammatory cytokine expressions. Dex-Lips could attenuate pain by regulating PGE2. Dex-Lips treatments reduced the expression of TNF-α, IL-1β, and IL-6 in DRG. Moreover, Dex-Lips could reduce inflammation in the cartilage and serum. Additionally, Dex-Lips repolarize synovial macrophages to M2 phenotypes in miR-204/-211-deficient mice. In conclusion, Dex-Lips inhibited the inflammatory response and alleviated the pain symptoms of OA by affecting the polarization of macrophages.