Objective: To examine whether baseline knee joint effusion volume and the change in effusion volume over 1 year are associated with cartilage volume loss, progression of radiographic OA (ROA) over 4 years and risk of total knee replacement over 6 years. Methods: This study included 4115 Osteoarthritis Initiative participants with knee joint effusion volume quantified by MRI at baseline. The change in effusion volume over 1 year was assessed. Cartilage volume loss and progression of ROA over 4 years were assessed using MRI and X-ray and total knee replacement over 6 years was assessed. Multiple linear regression and binary logistic regression were used for data analyses. Results: Baseline knee effusion volume (per 5 ml) was positively associated with a loss of medial and lateral cartilage volume [regression coefficient 0.13%/year (95% CI 0.10, 0.17) and 0.13%/year (95% CI 0.10, 0.16), respectively, both P < 0.001], progression of ROA [odds ratio (OR) 1.28 (95% CI 1.20, 1.37), P < 0.001], and risk of knee replacement [OR 1.12 (95% CI 1.05, 1.20), P = 0.001]. A 5 ml increase in knee effusion volume over 1 year was positively associated with medial cartilage volume loss [regression coefficient 0.09%/year (95% CI 0.04, 0.15), P = 0.001], progression of ROA [OR 1.21 (95% CI 1.11, 1.33), P < 0.001] and risk of knee replacement [OR 1.24 (95% CI 1.12, 1.37), P < 0.001]. Conclusions: Knee joint effusion volume assessed from MRI provides a continuous and sensitive measure that was associated with cartilage volume loss, progression of ROA and risk of total knee replacement. It may provide a method to identify individuals with an inflammatory OA phenotype who are at higher risk of disease progression.