This research examines relationship between total quality management and organizational performance with the mediating effect of knowledge transfer and Innovation capabilities. This research encourages investigation of the several logical factors that characterize overall quality management. The researcher used quantitative survey research approach to conduct this research. The population of the study was consisted of 240 textile industry employees in Faisalabad, Pakistan. Results show that quality management significantly effect on organizational performance. The results indicated that knowledge transfer and Innovation Capabilities mediate the relationship between total quality management and organizational performance. This study provides foundation for specialists to customize quality management practices under various situational factors while involving the knowledge- sharing and innovation capabilities of the employees by recognizing two distinct crucial directions of QM practices. This paper mainly contributes to the study of organizational context enablers for total quality management, especially when firms are seeking to build/improve innovation capabilities to enhance organizational performance.