Objectives: Cartilage degeneration is a key pathological change in osteoarthritis (OA). This study investigated the mechanism by which Astragalus polysaccharides (APS) alleviate cartilage degeneration. Methods: Primary rat articular chondrocytes were isolated, and a cell degeneration model was induced with lipopolysaccharide (LPS). Different concentrations of APS (100, 200, 400 mg/L) were tested, and NLR family pyrin domain containing 3 (NLRP3)-knockdown chondrocytes were generated. Cell viability (CCK-8 metabolic activity), levels of inflammatory factors, and gene and protein levels of markers associated with cartilage degeneration (including Acan, Adamts5, Nlrp3, and Caspase-1) were measured. Results: APS at different concentrations improved cell viability (CCK-8) of LPS-induced chondrocytes, inhibited the inflammatory cytokines interleukin-1β (IL-1β) and IL-18, upregulated Acan, and downregulated Adamts5, Nlrp3, and Caspase-1. Nlrp3 knockdown produced similar effects to APS, improving chondrocyte degeneration in vitro. Conclusion: APS alleviates LPS-induced degenerative responses in primary rat chondrocytes, and its protective effect is associated with modulation of the NLRP3/CASPASE-1 axis.