As anti-inflammatory treatments used in rheumatoid arthritis, such as glucocorticoids, often result in secondary detrimental effects on bone health, the objective of this study was to investigate the effects of oestrogen therapy (ET) on the development and activity of collagen-induced arthritis (CIA) in rats, with a focus on assessment of chondroprotective effects using biomarkers of type II collagen degradation. Forty female Lewis rats were allocated into four intervention groups: (i) control + vehicle; (ii) CIA + vehicle; (iii) CIA + ET; and (iv) CIA + prednisolone. During the 28-day intervention period we monitored body weight, time-point of disease onset, incidence of manifest disease and paw volume. Levels of the type II collagen degradation marker (CTX-II) were measured in serum. At euthanasia, hind paws were isolated, extracted for proteins and measured for the concentration of CTX-II. Matrix metalloproteinase (MMP) activity was evaluated using gelatinase zymography. Oestrogen treatment delayed the time-point of disease onset and reduced the incidence and degree of manifest immunoarthritis significantly, assessed by macroscopic evaluation of hind paw inflammation and paw volume. Measures of serum or tissue levels of CTX-II showed significantly reduced type II collagen degradation elicited by oestrogen treatment. In alignment, a decreased activity of MMP-2 and MMP-9 was found in the paw protein extracts. We have demonstrated that the anti-inflammatory effect of ET is linked to chondroprotective effects in an animal model of systemic immunoarthritis. As ET has positive rather than negative effects on bone health in contrast to prednisolone, these observations may be important for potential combination therapy.