Inspired by the innovation-led development strategy, Chinese government aims to have indigenous innovation as a significant way to sustainable economic development since 2006. China’s government has played a crucial role in planning and guiding the process through selective innovation policy instruments. This study attempts to explore the evolution and change of China’s innovation policy instruments by focusing on three cases, including software industry tax incentives, feed-in tariff of wind power and subsidies for alternative energy vehicles. Drawing on a multiple case study approach, this study finds that the China’s innovation policy instruments, similar to China’s economic reform, witness a “incremental reform” tendency - the government has modified the way to manipulate the existing policy instruments, so as to achieve the transition from government control to market incentives in the process of innovation-led development. The improvement of market economy system, change in the mindset of governance, involvement of policy scientists in decision making and the impacts of international environments are all the core explanative factors of such change in China’s innovation policy instruments.