The development of innovation is the most important component of any state that claims to be a leader in the global economic system. Until recently, the authorities, the business community, and society as a whole, underestimated the issue of transforming the economy towards innovative development. However, today the need for innovative development is recognized at all levels of government of the Russian Federation. Despite the tangible results in this area, the scientific community has noted many components that require significant improvement. Thus, attention is focused on the unsystematic approach to innovative development, the absence of a modern institutional innovation environment, the small scale of the innovation sphere, the presence of industry concepts in the absence of their implementation. The article examines the issue of innovative development of the domestic economy on the example of the North-West Federal District. The authors consider innovation policy by analyzing its individual elements: the regulatory framework, the tools of regional innovation policy, and research on relevant domestic institutions. Science, higher education, and high-tech production are paramount factors in ensuring the innovative development of the Northwestern Federal District, whose innovation policy is implemented in specific, in comparison with other regions, conditions and has both positive and restrictive properties. So, due to the geographical location (proximity to the western borders of the Russian Federation and ports), there is a pronounced dependence of the region’s economy on exports. One can clearly see the tendency for outstripping population decline in rural areas with their migration to progressively developing regional centers. The advantages of the NWFD include the close proximity of the region’s subjects to the largest sales markets – Moscow and St. Petersburg, the great scientific and educational potential of the district, whose “locomotive” of innovative growth is St. Petersburg, integration into the international system of diffusion of innovations through the implementation of cross-border projects cooperation, high loyalty to the NWFD from international investors, the world's largest manufacturing companies. The study allowed us to get the following results: to identify strong and weak trends in the development of innovations in the North-West Federal District, which are relevant to the innovative development of the country as a whole; to analyze the regulatory aspect of the innovation system of the Russian Federation, relevant to the NWFD; identify bottlenecks as well as points of potential growth; to characterize the main tools of innovative regional policy of the Russian Federation, to assess their advantages and disadvantages; conduct a cluster analysis of 11 subjects of the NWFD for the similarity of their innovative development.