The purpose of this study was to identify differences in knee proprioceptive accuracy between subjects with early knee osteoarthritis (OA), established knee OA, and healthy controls. Furthermore, the relation between proprioceptive accuracy on the one hand and functional ability, postural balance, and muscle strength on the other hand was also explored. New MRI-based classification criteria showing evidence of beginning joint degeneration have been used to identify subjects with early knee OA. A total of 45 women with knee OA (early OA, n = 21; established OA, n = 24) and 20 healthy female control subjects participated in the study. Proprioceptive accuracy was evaluated using the repositioning error of a knee joint position sense test using a three-dimensional motion analysis system. Subjective and objective functional ability was assessed by the knee injury and osteoarthritis outcome score, the timed "Up & Go" test, and the stair climbing test. The sensory organization test measured postural control. Muscle strength was measured by isokinetic dynamometry. Early OA subjects showed no significant differences in proprioceptive accuracy compared to healthy controls. In contrast, established OA subjects showed a higher repositioning error compared to early OA subjects (+29 %, P = 0.033) and healthy controls (+25 %, P = 0.068). Proprioceptive accuracy was not significantly associated with functional ability, postural balance, and muscle strength. Knee joint proprioceptive deficits were observed in established OA but not in early OA, suggesting that impaired proprioception is most likely a consequence of structural degeneration, rather than a risk factor in the pathogenesis of knee OA. Impaired proprioceptive accuracy was not associated with disease-related functionality in knee OA patients. Treatment strategies designed to address proprioceptive deficits may be not effective in prevention of knee OA progression and may have no impact on patients' functionality. However, this should be confirmed further in well-designed clinical trials.