The state of industry in Russia can be characterized as problematic. Industrial development trends at the present stage, in spite of the efforts of the state, are not encouraging. This situation calls for clarification of possible reasons for this situation and trends of industrial policy adjustments to achieve both industrial development and an increase in the efficiency of state regulation. The problems studied by the authors are typical for other countries as well. The purpose of this article is to analyze the state of the theory of industrial development at the present stage, and on this basis to substantiate the transformation of the Russian industry and its state regulation. The research methodology is based on a comparative analysis of Russian and foreign cyclical theories, scientific, technical, cluster and innovation development in industry, and government regulation theory. The article made a critical review of the existing industrial development theories, which revealed their characteristics and a current trend of merging these theories. The main provisions of the modern theory of industrial development should be considered when making strategic decisions, including at the state level. Growing industrial development issues give reason to assume that there are some contradictions between the theory and its practical implementation. Thus, it is necessary to evaluate the ongoing transformation of the theoretical and practical aspects and determine the direction of their alignment. It is characterized by specific scientific results obtained by the author. Assessment of the basic provisions of the theory of industrial development in retrospective and at the modern stage allowed the authors to substantiate conclusions and proposals for the transformation of the Russian industry in the direction of technological development, the search for effective systems of interaction between business, government, science and education. The authors suggest focusing further research on identifying the effective instruments of state industrial policy, which are aimed at achieving industrial development and the effectiveness of state regulation of development.