Context: Bleeding is of utmost concern in major orthopedic operations like total knee replacement, total hip replacement, and spine surgeries. Strategies to reduce blood loss must be employed to reduce allogeneic blood transfusion. Tranexamic acid (TAX) is an inexpensive synthetic derivative of the amino acid lysine. By attaching to lysine binding sites on plasminogen molecules it forms tranexamic acid–plasmin complex which has weaker fibrinolytic properties than plasmin alone. It also exhibits clot stabilizing and anti-inflammatory properties. When administered to surgical patients it can reduce blood loss and thus decrease transfusion requirements. Aim: This is a study to evaluate the efficacy and safety of tranexamic acid in reducing blood loss and need of postoperative blood transfusions following unilateral total knee replacement surgery in a tertiary care teaching hospital. Materials and methods: Sixty patients,18–70 years, American Society of Anesthesiology (ASA) statuses I and II undergoing unilateral total knee replacement under combined spinal-epidural anesthesia were enrolled in this prospective, randomized, double-blind study. Thirty patients each were randomly assigned to group T (TAX) and group C (control). Group T received intravenous tranexamic acid 10 mg/kg before tourniquet inflation followed by its infusion at 1 mg/kg/hour till skin closure. Group C received a similar amount of normal saline and served as the control group. The demographic data, duration of surgery, intraoperative vital parameters, intraoperative and postoperative blood loss, postoperative hemoglobin levels, quantity of blood transfusion required and a number of patients requiring blood transfusions and risk of the thromboembolic phenomenon were studied. Results: The mean (±SD) total blood loss was lower in the group receiving tranexamic acid (306.96 ± 75.23 mL) than in control group (543 ± 163.36 mL) which amounted to 43.47% less blood loss in the group receiving tranexamic acid. On an average control group required six times more blood transfusion than tranexamic acid group. Conclusion: Use of intravenous tranexamic acid is an effective and safe method to decrease blood loss in surgeries on the bone like total knee replacement.