Abstract-Innovation has been regarded as one of the most important aspect in a succesful company. Innovation is not something that could take place in a second, a company has to nurture and develop the innovative behaviors of their employees. Innovative behaviors can be nurtured and developed by continuous learning and developing a learning a culture, or becoming a learning organization. Besides inonovative behavior, a learning organization can also develop a sense of well being, that is work engagement, which in turn can also develop innovative behavior of the employees. This study aims to analyze the effect of learning organization towards employees' innovative behavior and mediated by work engagement using Structural Equation Modelling (SEM) method. Research data were collected from 244 employees of automobile dealers company in several locations acrossIndonesia using questionnaires. The study result showed that learning organization has a positve effect towards work engagement, in which work engagement has a positive effect toward employees' innovative behavior. Also, learning organization has a positive effect towards employees' innovative behavior, which means work engagement has a role of partial mediation.