OBJECTIVE: To assess the effectiveness of pulsed signal therapy in the treatment of knee osteoarthritis (Kellgren II or III). METHODS: A randomized, double-blind controlled clinical trial. The first 95 patients sent to the clinic with knee osteo-arthritis were selected and randomized into treatment with pulsed signal therapy or conventional physiotherapy. Assessment included recording of usual demographic data, pertinent history, baseline medication and radiographs. Clinical evaluation was made at baseline, 6 weeks and 6 months after the end of treatment by the same blinded doctor. At each follow-up time, the patient was asked to complete a visual analogue pain scale and a Lequesne score. The doctor recorded the degree of pain on motion and the ability to move the affected knee. RESULTS: Both treatments resulted in significant improvements in pain and physical function. A statistical difference was observed only for activities of daily living, where the physiotherapy was more efficient (p<0.03). The cost of treatment with pulsed signal therapy was significantly higher, double the treatment cost of conventional physiotherapy. CONCLUSION: Like physiotherapy, pulsed signal therapy has improved the clinical state of treated patients but with no significant statistical difference. Pulsed signal therapy is, however, more expensive.