This chapter presents a literature review of innovation in education and vocational education and training. Innovation is a term more often used than clearly defined in education, often employed interchangeably with related terms such as invention, reform, and change. New ideas, knowledge, and practices, however, can fail if they do not bring their desired results, impact negatively on other objectives, create new problems, or are not cost-effective. Although an assessment of whether to implement an innovation requires looking at its implications for other parts of its environment beyond those immediately affected, such kinds of systemic analysis are infrequent. There is a wide range of stakeholders in the process of innovation in VET, whose commitment and collaboration is crucial to success and who have different incentives for the inception and adoption of innovation. Available evidence suggests that VET organisations are not making use of the whole range of facilitators of innovation available to them and consequently, there is much unlocked potential in the VET sector to facilitate and increase innovation. Educators and policy-makers, on the other hand, have not sufficiently used the motors of innovation, including research in education. Research on teaching and learning from cognitive science, neuroscience, organizational theory, and other disciplines has thus rarely been put into practice. Furthermore, adequate research capacity has been lacking even in relatively general areas. The chapter closes with a model of innovation in education developed by the OECD Secretariat for this study, that is utilised in the analysis of the case studies in the empirical chapters of this publication.