Abstract: Under a modular division of labor, production factors are reconstructed into a networkshaped industrial chain. Deeply affected by the shape of this industrial chain, the mode of knowledge innovation has developed some new characteristics. This paper argues that the Networkdominant Model of Independent Innovation provides us with a theoretical framework for the study of knowledge innovation in the modular networkshaped industrial chain. According to the Networkdominant Model of Independent Innovation, independent innovation and collaborative innovation are the two primary ways of innovating knowledge. Under the guidance of system rules, the process of knowledge innovation can be divided into five phases: module division and the formation of system rules, collaboration among modules, system integration and testing, bidirectional feedback, modular combination and product innovation. Through this process modular innovation is intensified, standards are improved, and industry is upgraded.