Abstract: Organizational culture and knowledge management become the prominent dimensions in developing the health service innovation into achieve the high performance of the health service institution in the era of decentralization and competitiveness for local government Organizational culture has benefits to improve the condition of performance and innovation, and also knowledge management can help to make the organization stability and organization performance. Surprisingly, there is little research conducted to measure the organizational culture and knowledge management by using the health service innovation as a moderating variable toward the performance of health service institution.