Abstract:Innovation can create a market which did not exist, and the market can also define innovation. A wide range of companies, industry organizations, public and users participate in creating innovative market. At the same time, governments promote the design and formation of emerging markets through the national laws, regulations and other administrative means. From the perspective of co-evolution relationship between market and innovation, based on the analysis of connotation, characteristics and formation mechanism of innovation market, this study focuses on the role that governments play in cultivating and promoting innovation market and the mechanism of the process. As a result, this study puts forward a policy system that's embedded into a demand-side innovation oriented market.