It could be something as simple as endorphines. Endorphines are responsible for the "runners high". They help control pain, among other things.

But you could also just be warming the tissue, which would relax the muscles around your knee, which might take some of the stress off the joint and alleviate the pain.

And of course when riding a bike you aren't putting weight on your knees, so they are less mechanically stressed by the activity...hence both benefits that rebekah529 identified could provide a noticeably pleasant sensation.

Oh, and another fun fact to encourage your awesome weigh loss goals sherry. Studies have shown that in people with arthritis, a weight loss of one pound equals a four pound pressure reduction on the knees.. so good for you. !

Another reason people with arthritis experience relief with some sort of exercise is because the tissue in your knee joint receives nutrition not from your blood supply like the majority of tissue in your body, but actually from the joint fluid, which does not really move around much. Exercise / movement helps circulate that fluid and allows the cartilage access nutrients.

I have an ankle that sounds like those knees. It was bone on bone twenty years ago, hate to think what it looks like now. Last time I had rads done the technician said I shouldn't be able to walk as well as I did! (Said rads never made it to the orthopod though...long story). I've never really pondered why my ankle feels better *overall* when I'm working out regularly (and it has to be weight-bearing, ie. walk/run on the treadmill), but this makes sense to me. I've never had it injected. It's not an endorphin thing - on a day in, day out basis I take fewer lame steps (forgive me the horse terminology!) when I'm getting on the treadmill consistently. With the horses, we see the same thing - in fact there is probably a study out there supporting that.