Studies on teachers' innovative work behavior (IWB) have identified the importance of self‐efficacy beliefs and school climate. However, there is a lack of understanding of innovation‐specific self‐efficacy beliefs in earlier research. Further, the relative importance of these variables for teachers' IWB is yet to be examined. Objectives of the present study were to (i) conceptualize and develop an instrument to assess innovative self‐efficacy (ISE) of school teachers, and (ii) examine the dynamics of relationships among ISE, perceived school climate, and IWB of teachers. The research was classified into two studies. In both studies, data were collected randomly from secondary and higher secondary teachers of private, government, and government‐aided schools in Kolkata (INDIA) and adjoining areas. Study 1 dealt with the first objective, that is, the construction of the ISE scale. Factor structure and psychometric properties of the scale were tested on 300 teachers. Exploratory factor analysis revealed two dimensions: teaching reflection and teaching design implementation. In Study 2, ISE scale, IWB Scale, and Revised School Level Environment Questionnaire were administered to 400 teachers. Confirmatory factor analysis was performed, and goodness of fit estimates was calculated for the ISE scale, indicating an acceptable fit. Further, hierarchical regression analyses noted that school climate factors (collaboration, school resources, decision‐making, and instructional innovation) moderated the relationship between teaching reflection efficacy and IWB. In the current backdrop of different educational reforms, IWB is a thrust that needs to be promoted among school teachers. The present study implies that school administration can encourage teachers' innovativeness by increasing opportunities for innovation in school. Training and intervention programs aimed at enhancing teachers' ISE levels will also increase IWB in them.