A team led by Amanda Fosang of the University of Melbourne and the Murdoch Children's Research Institute, identified the ADAMTS5 enzyme by studying genetically modified mice.
Fosang said she was confident the same enzyme would be found to play a big role in the breakdown of cartilage in people.
"We think it is a very significant find, because until now we hadn't known what enzyme was doing the damage," she said.
The find could lead to the development of new drugs to block the action of the natural substance. The results were published in the journal Nature along with another British-led study that pinpointed the enzyme as the culprit in mice.