Polyethylene glycol (PEG)-modified carbon nanotubes have been successfully employed for intra-articular delivery in mice without systemic or local toxicity. However, the fate of the delivery system itself remains to be understood. In this study 2 kDa PEG-modified single-walled carbon nanotubes (PNTs) are synthesized, and trafficking and degradation following intra-articular injection into the knee-joint of healthy mice are studied. Using confocal Raman microspectroscopy, PNTs can be imaged in the knee-joint and are found to either egress from the synovial cavity or undergo biodegradation over a period of 3 weeks. Raman analysis discloses that PNTs are oxidatively degraded mainly in the chondrocyte-rich cartilage and meniscus regions while PNTs can also be detected in the synovial membrane regions, where macrophages can be found. Furthermore, using murine chondrocyte (ATDC-5) and macrophage (RAW264.7) cell lines, biodegradation of PNTs in activated, nitric oxide (NO)-producing chondrocytes, which is blocked upon pharmacological inhibition of inducible nitric oxide synthase (iNOS), can be shown. Biodegradation of PNTs in macrophages is also noted, but after a longer period of incubation. Finally, cell-free degradation of PNTs upon incubation with the peroxynitrite-generating compound, SIN-1 is demonstrated. The present study paves the way for the use of PNTs as delivery systems in the treatment of diseases of the joint.