Palm oil is an important cash crop for Malaysia and determining the factors affecting the diffusion of this cash crop is considered a viable strategy for attracting farmers to take up palm oil farming. This study seeks to measure the influence of palm oil innovation characteristics, the level of knowledge, social system and communication channels towards acceptance of agricultural innovation among smallholder palm oil farmers. Diffusion of Innovation Theory is adopted in formulating the theoretical framework to measure how the palm oil innovation is diffused among the smallholder farming community. This study employed a quantitative approach to obtain data from smallholder farmers in an area in Sarawak, East Malaysia. A survey using a questionnaire was used to collect data from ninety-nine (99) sampled respondents representing the smallholder palm oil farmers. From the findings, only the characteristics of innovation and communication channels significantly influenced the acceptance of oil palm innovation among the farmers on the East Coast of Malaysia. However, unlike the characteristics of innovation, which positively influenced innovation acceptance, the influence of communication channels was negative. The use of communication channels, especially radio and new media for development should be geared up as an aspect of development communication.