Osteoarthritis (OA) continues to be one of the leading causes of 'years lived with disability' worldwide. Symptomatic knee OA is highly prevalent among people aged 50 years and over and is destined to become an ever more important healthcare problem. Current management of knee OA includes non-pharmacological and pharmacological treatments. Spa therapy is one of the most commonly used non-pharmacological approaches for OA in many European countries, as well as in Japan and Israel. Despite its long history and popularity, spa treatment is still the subject of debate and its role in modern medicine continues to be unclear. The objective of this review is to summarize the currently available information on clinical effects and mechanisms of action of spa therapy in knee OA. Various randomized controlled clinical trials (RCTs) were conducted to assess the efficacy and tolerability of balneotherapy and mud-pack therapy in patients with knee OA. Data from these clinical trials support a beneficial effect of spa therapy on pain, function and quality of life in knee OA that lasts over time, until 6-9 months after the treatment. The mechanisms by which immersion in mineral or thermal water or the application of mud alleviate suffering in OA are not fully understood. The net benefit is probably the result of a combination of factors, among which the mechanical, thermal and chemical effects are most prominent. In conclusion, spa therapy seems to have a role in the treatment of knee OA. Additional RCTs and further studies of mechanisms of action with high methodological quality are necessary to prove the effects of spa therapy.