All over the world, rising population, diminishing natural resources, and the necessity of sustainable growth pointed out the importance of innovation. In the growth strategies, the ability to innovate, as knowledge capital, is one of the most important determinants of sustainable development for all developing countries as their aim is to generate added value, higher development, and a sustainable environment. The aim of this study is to present the importance of innovation for sustainable growth performance in the 13 Mediterranean countries. In the chapter, the role of innovation in macroeconomic performance and sustainable environment in the aforementioned countries will be analyzed. This chapter not only provides an analysis of the relationship between the innovation, macroeconomic factors, and environmental degradation but also policy suggestions to put forth to have more innovative technologies, sustainable growth performance, and environment conservation.