A finite element analysis was undertaken in concert with an animal model of mechanically-induced osteoarthritis. The numerical model was used to explore stress transmission anomalies associated with localized subchondral stiffening due to implantation of small cylindrical plugs immediately below the subchondral plate of sheep. The quasi-static, plane strain computational formulation included solution of the non-linear intra-articular contact problem, and was validated by comparison with a corresponding analytical solution and with the in vivo experimental results. The numerical results showed that stress aberrations due to metal implant insertion were felt most greatly in the bone immediately surrounding the implant, but that nominal compressive stress elevations up to about 50% could also be induced in the overlying deep hyaline cartilage layer. This localized cartilage stress elevation following the insertion of a metal plug could be seriously affected by a number of factors, including the positioning of the implant, variation in the area of intra-articular contact, or the elastic modulus of the cancellous bone and/or subchondral plate. Experimentally-observed fibrous encapsulation also reduced the cartilage stress elevation effect, but later bony remodelling and the development of a corticalized shell around the implant encapsulation served to re-elevate the local cartilage stresses.