Purpose:　The　purpose　of　this　paper　is　to　clarify　the　influence　of　knowledge　sharing　on　innovation　performance　from　the　knowledge-based　dynamic　capabilities　perspective　within　industrial　clusters.　Design/methodology/approach:　This　paper　designed　a　five-point　Likert　questionnaire　measuring　knowledge　sharing,　dynamic　capabilities,　trust　and　innovation　performance,　and　a　sample　was　collected　from　the　industrial　clusters　within　Fujian　province　in　China.　Empirical　analysis　was　applied　to　test　the　hypotheses.　Findings:　Significant　relationships　were　found　between　knowledge　sharing　and　innovation　performance.　Three　key　characteristics　of　dynamic　capabilities　were　distinguished,　namely,　knowledge　acquisition　capability,　knowledge　integration　capability　and　knowledge　creative　capabilities.　On　this　basis,　further　analysis　found　that　dynamic　capabilities　played　a　mediating　role　in　this　relationship,　and　trust　was　a　significant　moderator.　Practical　implications:　This　paper　helps　to　understand　the　mechanism　between　knowledge　sharing,　knowledge-based　dynamic　capabilities,　trust　and　innovation.　Managers　should　focus　on　contributing　to　knowledge　sharing　activities,　dynamic　capabilities　and　trustful　environment　to　improve　innovation　effectively.　Originality/value:　This　paper　contributes　to　the　burgeoning　literature　on　the　relationship　between　knowledge　sharing　and　innovation　performance　in　China.　Further,　it　highlights　the　crucial　role　of　cluster　knowledge　management　in　contributing　to　innovation　and　management　practices.　©　2018,　Emerald　Publishing　Limited.