Kruppel-like factor 2 (KLF2) plays an important role in the regulation of a variety of immune cells, including monocytes. We have previously shown that KLF2 inhibits proinflammatory activation of monocytes. However, the role of KLF2 in arthritis is yet to be investigated. In the current study, we show that recruitment of significantly greater numbers of inflammatory subset of CD11b(+)F4/80(+)Ly6C+ monocytes to the inflammatory sites in KLF2 hemizygous mice compared to the wild type littermate controls. In parallel, inflammatory mediators, MCP-1, Cox-2 and PAI-1 were significantly up-regulated in bone marrow-derived monocytes isolated from KLF2 hemizygous mice, in comparison to wild-type controls. Methylated-BSA and IL-1β-induced arthritis was more severe in KLF2 hemizygous mice as compared to the littermate wild type controls. Consistent with this observation, monocytes isolated from KLF2 hemizygous mice showed an increased number of cells matured and differentiated towards osteoclastic lineage, potentially contributing to the severity of cartilage and bone damage in induced arthritic mice. The severity of arthritis was associated with the higher expression of proteins such as HSP60, HSP90 and MMP13 and attenuated levels of pPTEN, p21, p38 and HSP25/27 molecules in bone marrow cells of arthritic KLF2 hemizygous mice compared to littermate wild type controls. The data provide new insights and evidences of KLF2-mediated transcriptional regulation of arthritis via modulation of monocyte differentiation and function.