The paper aims to test the mediating role of organizational learning (OL) between transformational leadership (TL) and innovation. Based on the literature review, we developed a research model proposing that TL enhances innovation capability through its positive effects on four components of OL: Knowledge acquisition, knowledge dissemination, knowledge interpretation, and organization memory. Structural equations modeling (SEM) is applied to examine the influence of independent factors on dependent ones via data collected from 76 Chinese firms. The results indicated that aspects of OL act as the mediators between TL and innovation capability. Especially, the findings highlight the important role of TL practice to enhance OL and the knowledge dissemination's significant impacts on innovation capability. The paper has provided theoretical and managerial initiatives on theory of leadership and innovation that might help firms identify a right pathway to promote their innovation capability aimed at adapting more effectively to the changes of business environment.