Mesenchymal stem cells (MSCs) exhibit substantial potential for osteoarthritis (OA) therapy through cartilage regeneration, yet the realization of optimal therapeutic outcomes is hampered by their limited intrinsic reparative capacities. Herein, MSCs are engineered with circular mRNA (cmRNA) encoding fibroblast growth factor 18 (FGF18) encapsulated within lipid nanoparticles (LNP) derived from a glycerolipid to facilitate OA healing. A proprietary biodegradable and ionizable glycerolipid, TG6A, with branched tails and five ester bonds, forms LNP exhibiting above 9-fold and 41-fold higher EGFP protein expression in MSCs than commercial LNP from DLin-MC3-DMA and ALC-0315, respectively. The introduction of FGF18 not only augmented the proliferative capacity of MSCs but also upregulated the expression of chondrogenic genes and glycosaminoglycan (GAG) content. Additionally, FGF18 enhanced the production of proteoglycans and type II collagen in chondrocyte pellet cultures in a three-dimensional culture. In an OA rat model, transplantation with FGF18-engineered MSCs remarkably preserved cartilage integrity and facilitated functional repair of cartilage lesions, as evidenced by thicker cartilage layers, reduced histopathological scores, maintenance of zone structure, and incremental type II collagen and extracellular matrix (ECM) deposition. Taken together, our findings suggest that TG6A-based LNP loading with cmRNA for engineering MSCs present an innovative strategy to overcome the current limitations in OA treatment.