The rich diversity of Persian carpets is a symbol of different cultures and traditions in this country. To ensure sustainability of the Handmade Carpet Industry Knowledge and Innovation System (HCIKIS), attention should be paid to the transformative approach that pursues holistic transformation in the production and consumption systems. The present study aimed to identify Formal Transformation Institutions (FTIs), classify them into main categories, and analyze them based on the production step, approval date, institution type, and geographical area of approval. Based on the results, there were 316 Formal Institutions (FIs) in the Handmade Carpet Industry (HCI). By open coding, 372 concepts were extracted from 509 concepts derived from different FTIs. Based on the axial coding, the FIs were divided into six initial categories of "carpet authority", "carpet sales and maintenance inside Iran", "handmade carpet exports and imports", "carpet production infrastructure", "handmade carpet production", and "sanitary-therapeutic category". At the next step, the matrix of the main categories based on different production steps was drawn. Among the main categories, the highest frequency was related to the category of "carpet production infrastructure" and the subcategory of "financial supply of carpet". Although there are many FIs that support production, carpet weavers, as the main people involved in production, have received minimum supports during their working years due to unawareness of supports and loan conditions.