This paper primarily aims to address the following two key questions: Do intellectual capital (IC) dimensions matter for regional innovation? And, if regional development can be explained in terms of knowledge-based dynamics, what the key IC pillars are driving wealth generation? In order to do so, this paper discusses the IC dimensions of regional development, particularly the adoption of the model of the knoware tree. The paper also introduces the IC innovation capacity model in order to explain why IC should be addressed from policy and strategy point of views as a key driver of innovation processes of local systems.