Objective To investigate the clinical effect of tendonregulating and bonesetting acupotomy in the treatment of knee osteoarthritis (KOA) and its effect on gait. Methods A total of 65 patients with KOA were divided into acupotomy group and control group using a random number table. The 32 patients in the acupotomy group received tendonregulating and bonesetting acupotomy, and the 33 patients in the control group received conventional acupuncture. Visual analogue scale (VAS) score, Hospital for Special Surgery (HSS) knee score, and gait analysis were used before and after treatment to evaluate clinical outcome. Results After treatment, both groups had a significant reduction in VAS score (P<0.05) and significant increases in total HSS score and the scores of pain, function, and range of motion (P<0.05); in addition, the acupotomy group had a significant increase in flexion deformity score (P<0.05), and both groups had significant improvements in stride frequency, step speed, and step length (P<0.05). Compared with the control group after treatment, the acupotomy group had a significant reduction in VAS score (P<0.05), significant increases in total HSS score and the scores of pain, function, and range of motion (P<0.05), and a significant improvement in stride frequency (P<0.05). The acupotomy group had a significantly better clinical outcome than the control group (P<0.05). Conclusion For patients with KOA, tendonregulating and bonesetting acupotomy can significantly alleviate pain symptoms and improve joint function, range of motion, and stride frequency, which reflects the idea of "paying equal attention to tendon and bone and treating both manifestation and root cause of disease" in the treatment of KOA.