This chapter explains and discusses the definition of public sector innovation. Public sector innovation includes two concepts or terms: (1) public sector and (2) innovation. The first concept, “the public sector,” refers to the general government organizations owned and funded by the government and may include or exclude state-owned enterprises. The second concept, “innovation,” refers to novel ideas or practices implemented organizations. Thus, novelty and implementation are two key terms defining innovation. Therefore, public sector innovation refers to innovative activities in the public sector, and this chapter provides information about it. In addition, this chapter discusses how and in what ways innovation differs from public management reforms, organizational change, invention, creativity, entrepreneurship, and improvement.