This report presents interim findings from the research project on innovation in cities that the Centre for Cities is conducting for NESTA (the National Endowment for Science, Technology and the Arts). It discusses the extent to which innovation is an urban phenomenon, and what is special about cities that enables innovation. The report reveals that innovation is concentrated in a number of cities and urban areas in the UK, although there are some innovation poor as well as innovation rich cities. The report provides a conceptual framework for understanding the process of innovation in cities, and how urban assets, networks, markets and institutions might facilitate higher levels of innovation. We conclude that the main ways that cities can enable innovation lie in Urban Hubs and Local Links models.