Mesenchymal stem cells (MSCs) immunomodulate inflammatory responses through paracrine signalling, including via secretion of extracellular vesicles (EVs) in the cell secretome. We evaluated the therapeutic potential of MSCs-derived small EVs in an antigen-induced model of arthritis (AIA). EVs isolated from MSCs cultured normoxically (21% O2, 5% CO2), hypoxically (2% O2, 5% CO2) or with a pro-inflammatory cytokine cocktail were applied into the AIA model. Disease pathology was assessed post-arthritis induction through swelling and histopathological analysis of synovial joint structure. Activated CD4+ T cells from healthy mice were cultured with EVs or MSCs to assess deactivation capabilities prior to application of standard EVs in vivo to assess T cell polarisation within the immune response to AIA. All EVs treatments reduced knee-joint swelling whilst only normoxic and pro-inflammatory primed EVs improved histopathological outcomes. In vitro culture with EVs did not achieve T cell deactivation. Polarisation towards CD4+ helper cells expressing IL17a (Th17) was reduced when normoxic and hypoxic EV treatments were applied in vitro. Normoxic EVs applied into the AIA model reduced Th17 polarisation and improved Regulatory T cell (Treg):Th17 homeostatic balance. Normoxic EVs present the optimal strategy for broad therapeutic benefit. EVs present an effective novel technology with the potential for cell-free therapeutic translation.