In this article we analyse the shift that the textileclothing sector has recently suffered in the Valencian Central Counties from the role played by the institutions of the local innovation system. This paper includes the main results derived from different research projects undertaken between 2004 and 2009. The analytical framework used is based on the innovation systems approach, which emphasizes not only the existence of organizations supporting the industry, but also their behavioural relationships. Thus, we identify the sources of innovation in an industry localized in a peripheral region with low technological intensity. This sector currently presents a structural adjustment process derived from the opening of international markets.