Against the background of the innovation-driven development strategy, the scientific and technological innovation system and mechanism increasingly demonstrate the attribution of the fundamental economic institution of socialism with Chinese characteristics. It was of great theoretical and practical significance for the Fourth Plenary Session of the 19^th Central Committee of the Communist Party of China (CPC) to include improving the system and mechanism of the scientific and technological innovation into the category of upholding and improving the basic socialist economic institution of China for the first time. The 20^th National Congress of the CPC further decided to establish fundamental institution that encourages comprehensive innovation. China’s socialist economic institution has experienced different stages of evolution. The scientific and technological innovation system and mechanism are the theoretical choices for developing and improving the basic socialist economic system in the new era. Having the theoretical characteristics of the fundamental economic institution, the scientific and technological innovation system and mechanism form an inherent logical relationship with the fundamental socialist economic institution. The scientific and technological innovation system and mechanism is contemporarily relevant since it, together with the system with the public ownership as the main body and various types of ownership economies developing together, the system with the distribution according to work as the main body and various distribution methods co-existing, and the socialist market economic system, constitutes an essential element of the basic socialist economic institution. The scientific and technological innovation system and mechanism are the innovation and development of the fundamental economic institution in promoting the modernization of the national governance system and governance capacity and are the experience summary and institutional innovation of the practice of socialism with Chinese characteristics. They are in line with China’s national conditions and development reality and are conducive to the liberation and development of productive forces and the realization of high-quality economic development. They have important theoretical significance and practical value for upholding and developing socialism with Chinese characteristics on the new journey of realizing the second centenary goal.