The inflammatory cytokine interleukin-26 (IL-26) is highly expressed in the serum and synovial fluid of patients with inflammatory arthritis. The effect of IL-26 on human articular chondrocytes (HACs) remains unclear. Obesity is associated with disability of patients with rheumatoid arthritis and disease activity in those with ankylosing spondylitis. The saturated free fatty acid palmitate with IL-1β can synergistically induce catabolic effects in HACs. The aim of this study was to evaluate the effects of IL-26 and palmitate in HACs. In this study, palmitate markedly synergizes the IL-26-induced proinflammatory effects and matrix protease, including COX-2, IL-6, and MMP-1, in HACs via the toll-like receptor 4 (TLR4)-ERK1/2-c-Jun signal transduction pathway. The synergistic catabolic effects of palmitate and IL-26 were attenuated by inhibitors of TLR4 (TAK242), ERK1/2 (U0126), or c-Jun (SP600125) in HACs and cartilage matrix. In addition, metformin, a potential inhibitor of TLR4, also decreased expression of COX-2 and IL-6 induced by co-incubation with IL-26 and palmitate. IL-26 and palmitate synergistically induced expression of inflammatory and catabolic mediators, resulting in articular cartilage matrix breakdown. The present study also revealed a possible mechanism and therapeutic targets against articular cartilage degradation by increased saturated fatty acids in patients with inflammatory arthritis.