Abstract: Provided are liposomes that encapsulate adenosine. The liposomes may be formed from sphingomyelin or a combination of sphingomyelin and 1,2-dimyristoyl-sn-glycero-3-phosphocholine (DMPC) or a combination of sphingomyelin and 1,2-dimyristoyl-sn-glycero-3-phosphorylglycerol (DMPG) or a combination of sphingomyelin, DMPG, and DMPC. The liposomes encapsulating adenosine may be used to induce cartilage regeneration, treat osteoarthritis, alleviate joint pain, and/or slow, arrest, and/or reverse progressive structural tissue damage associated with osteoarthritis or treat osteoarthritis, rheumatoid arthritis, acute gouty arthritis, and/or synovitis. The liposomes may release adenosine for up to two weeks.