This study identifies the topical issues of innovative transformation of the manufacturing industry in the Russian Federation. A structural and statistical analysis of the basic indicators of innovative development and the state of the technological base of Russian manufacturing industry is observed. Positive and negative trends of these processes are noted; the list of system problems of processing enterprises is revealedsuch as low level of productivity, insufficient level of innovative activity, progressive depreciation of fixed assets, reduction of internal expenses for R&D, as well as unstable dynamics of the high-tech sector of machine-building industry. It was found that the most significant factor, preventing the transition of the domestic manufacturing industry towards the innovative development, is not the factor of infrastructure restrictions, but a number of institutional and environmental contradictions. The authors stand for the position that the elimination of these contradictions is possible due to the development of innovation ecosystem that can effectively create the necessary business environment and eradicate existing barriers to business cooperation for industrial, scientific, educational and other organizations. The objects of this ecosystem will be characterized by a state of stable innovation and investment, a state of high professional credibility, an established network of communications, a free transfer of knowledge and technologies, as well as high-tech methods of production and experimental engineering, which contribute to the development of the production culture of employees and the spirit of innovative entrepreneurship. A set of measures for the creation and development of an innovation ecosystem is proposed, which implies a balanced transformation of the internal and external environment of the Russian processing industry. The set includes: 1) the reformation of engineering and processing enterprises, aimed to: adjust the existing strategies and to improve the quality and flexibility of management methods; update the content of management functions; transform and computerize the business processes; optimize the organizational, economic, and structural model of an industrial enterprises; 2) the territory development for innovative pilot projects in Russia in order to accelerate the implementation and commercialization of product innovations; 3) the development of a system of priority state support for those firms that produce the product innovations; 4) measures for improving the quality of national industrial projects for targeted use; 5) optimization of the business climate by introducing the cluster production for further integration of research and engineering companies in business environment; 6) training of qualified staff for the purposes of innovation development in a highly technological economy. Keywordsinnovation development, transformation of enterprises, innovation ecosystem, institutional changes, processing industry. I. In the current market conditions, the most impo...