To determine if exercise therapy is superior to arthroscopic partial meniscectomy for knee function in middle aged patients with degenerative meniscal tears. Randomised controlled superiority trial. Orthopaedic departments at two public hospitals and two physiotherapy clinics in Norway. 140 adults, mean age 49.5 years (range 35.7-59.9), with degenerative medial meniscal tear verified by magnetic resonance imaging. 96% had no definitive radiographic evidence of osteoarthritis. 12 week supervised exercise therapy alone or arthroscopic partial meniscectomy alone. Intention to treat analysis of between group difference in change in knee injury and osteoarthritis outcome score (KOOS4), defined a priori as the mean score for four of five KOOS subscale scores (pain, other symptoms, function in sport and recreation, and knee related quality of life) from baseline to two year follow-up and change in thigh muscle strength from baseline to three months. No clinically relevant difference was found between the two groups in change in KOOS4 at two years (0.9 points, 95% confidence interval -4.3 to 6.1; P=0.72). At three months, muscle strength had improved in the exercise group (P≤0.004). No serious adverse events occurred in either group during the two year follow-up. 19% of the participants allocated to exercise therapy crossed over to surgery during the two year follow-up, with no additional benefit. The observed difference in treatment effect was minute after two years of follow-up, and the trial's inferential uncertainty was sufficiently small to exclude clinically relevant differences. Exercise therapy showed positive effects over surgery in improving thigh muscle strength, at least in the short term. Our results should encourage clinicians and middle aged patients with degenerative meniscal tear and no definitive radiographic evidence of osteoarthritis to consider supervised exercise therapy as a treatment option.Trial registration www.clinicaltrials.gov (NCT01002794).