The study of innovation mechanisms in one of Japan's major industrial regions (Chukyo, based around Nagoya) is explored using a four-part model. This identifies the role of core assembly firms and their sub-contractors, national and local government agencies, local chambers of commerce and private-sector lobby groups. The Chukyo region innovation system (CRIS) was found to exhibit long-term stability and appears to have weathered the economic challenges of the late 1980s and early 1990s. The Chukyo region's emphasis on continuous upgrading and kaizen has given it particular competitive advantages in 'downstream' innovation activities; however, it now faces the challenge of moving further `upstream' into areas of basic research.