The purpose of the study is to empirically investigate the relationship between transformational leadership, work motivation and employees' innovative behavior at work. In a survey of 252 employees of technicians, engineers and R&D members in Taiwan's firms, the results indicate that transformational leadership has a positively direct effect on employees' innovative behavior. In addition, the relationship between transformational leadership and innovative behavior are mediated by intrinsic motivation. The results also indicate that the extrinsic motivation has a positively direct effect on employees' innovative behavior; however, extrinsic motivation moderated the relationship between intrinsic motivation and innovative behavior. Finally, the effect of interaction of transformational leadership, extrinsic motivation and intrinsic motivation on employees' innovative behavior is also examined. The managerial implications of the finding are discussed.