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With the rapid development and popularization of Internet, the theory of KM has been evolving. Under the knowledge-based economy, it's fatal for enterprise to quickly and efficiently use knowledge, thus improve their innovation capabilities. This paper reviews some definitions of KM and its bearing on enterprise performance. It discusses the Role of KM in enterprise innovation and its capability from the view of knowledge, and the principles of KM application. It's a reasonable and logic way to improve enterprise innovation capability through KM. The paper constructs the integration of KM and enterprise's MIS, the advantages of integration, the affection of integration system on improving enterprise innovation capability.