Nowadays, managers recognize the value of knowledge as an intangible asset which stimulates innovation in organisations. However, few studies examine the role of human resource management in fostering knowledge capability which leads more innovation in enterprises. For this reason, this paper investigates the impacts of the policies and practices of human resource management in the relationship between knowledge management capability on innovation. The study is empirically based on the primary data collected from 122 medium and large sized organizations that are registered to Kocaeli Chamber of Industry, operating in Kocaeli, one of the most important industrial cities of Turkey. Data obtained from questionnaires will be analyzed through the SPSS statistical packet program and PLS-Graph. The Sobel test is used to measure the significance of mediation effect of knowledge management capability. The results indicate that Human Resource Management (HRM) Capabilities are positively related to Knowledge Management (KM) Capability which turn into innovation. Furthermore, HRM Capabilities have both direct and indirect effect mediated by KM Capabilities on Innovation.