Objective: To observe the clinical efficacy of herbal compress and exercise therapy in treating knee osteoarthritis (KOA). Methods Sixty-eight cases were randomized into two groups:control group in which 33 cases were treated with Voltaren Release Tablets and exercise therapy, and treatment group in which 35 cases were treated with herbal compress and exercise therapy, with the course of 14 days. The clinical efficacy, visual analogue scale (VAS) and Lequesne index were compared.  Results: ① The total effective rate was 97.14% in the treatment group and 75.76% in the control group, and the clinical efficacy of the treatment group was superior to that of the control group (P＜0.05). ② The visual analogue scale (VAS) and Lequesne index were decreased after the treatment in both groups (P＜0.05), and the indexes of the treatment group were lower than those of the control group (P＜0.05).  Conclusion: Combined herbal compress and exercise therapy has positive effect on knee osteoarthritis by alleviating the pain, swell and morning stiffness markedly.