Inclusion Criteria:

• Ambulatory subjects with OA of the knee with symptoms for at least 6 months and pain on the majority of days in the last 30 days. Symptoms must include knee joint pain, and may include crepitus, swelling and/or effusion of the knee. In subjects with bilateral knee OA, the more symptomatic knee is the index knee. Subjects may be taking NSAIDs, analgesics and/or undergoing physical therapy.
• Age > 40 years
• Radiographic evidence on posteroanterior (PA) and lateral standing, flexed x-rays of at least one osteophyte.
• Subjects must be willing to abstain from other intraarticular treatments of the knee or any surgery for 12 weeks on study.
• Ability to comply with the study and give informed consent.
• Subjects must be willing to abstain from NSAIDs or analgesic medications (except for acetaminophen) for 48 hours prior to assessments, at screening, day 1 and week 4, 8, 12, and 24 visits.

Exclusion Criteria:

• Concurrent medical or arthritic conditions which could interfere with evaluation of the index knee joint including fibromyalgia.
• Subject has received arthroscopic or open surgery to the index joint within 6 months of study start
• The presence of surgical hardware or other foreign body in the index joint
• Corticosteroid, hyaluronic acid or other intraarticular injection within 3 months of study start
• Use of chondroitin and/or glucosamine within 4 weeks prior to study start
• History of Reiter's syndrome, rheumatoid arthritis, psoriatic arthritis, ankylosing spondylitis, lymphoma, arthritis associated with inflammatory bowel disease, sarcoidosis or amyloidosis
• Clinical signs and symptoms of active knee infection or crystal disease
• Clinically significant cardiac disease, consult study Medical Monitor
• Have an increased predisposition for the development of infections
• History of malignancy, with the exception of resected basal cell carcinoma, squamous cell carcinoma of the skin, or resected cervical atypia or carcinoma in situ.
• More significant pain from the back or the hip than the knee
• Skin breakdown at the knee where the injection would take place
• Planned knee replacement during the study period
• For subjects undergoing MRI, the presence of contraindications to having an MRI at the specific imaging facility.
• For subjects undergoing MRI, an estimated Glomerular Filtration Rate (eGFR) of <45 mL/min calculated using the Cockcroft-Gault estimate for eGFR as follows: eGFR = (140-age [yrs]) X weight [kg] / serum creatinine [mg/dL] X 72 (X 0.85 for women)
• For subjects undergoing MRI, known allergy to gadolinium contrast material
• Has known or clinically suspected infection with human immunodeficiency virus (HIV), hepatitis C or B viruses
• Has participated within 30 days or will participate concurrently in another investigational drug or vaccine study
• Has a history of drug or alcohol dependence in the past 3 years
• Known sensitivity to lidocaine or OP-1
• Female with reproductive capability
• Has other serious, non-malignant, significant, acute or chronic medical or psychiatric illness that, in the judgment of the Investigator, could compromise subject safety, limit the subject's ability to complete the study, and/or compromise the objectives of the study.
• Prior use of a bone morphogenetic protein.