["Business Strategy and the Environment, EarlyView. ", "\nABSTRACT\nThe increasing popularity of ecotourism in regions like Central America and the Caribbean, particularly in the Dominican Republic, necessitates a deeper understanding of how these businesses can integrate innovation with environmental sustainability. Thus, this study analyzes the organizational mechanisms that explain how ecotourism companies convert environmental leadership into eco‐innovation results. Specifically, this paper explores the relationships among green transformational leadership, green creativity, and eco‐innovation within ecotourism companies. Addressing gaps in current research, we employed a quantitative survey methodology, collecting data from 187 ecotourism companies in the Dominican Republic. Our findings, analyzed using partial least squares structural equation modelling (SEM‐PLS), reveal that green transformational leadership positively influences extrinsic motivation, green creativity, and ultimately eco‐innovation. The study highlights the significance of aligning green creativity with business strategies to foster sustainable innovation. Additionally, we discuss the potential negative impacts of extrinsic motivation on employee development and propose hybrid management approaches to mitigate these effects. These insights offer valuable academic and practical implications, suggesting that effective leadership and creativity are crucial for the sustainable development of ecotourism businesses. These findings allow us to reinterpret eco‐innovation as a systemic organizational capacity, particularly relevant in territorially and ecologically sensitive contexts such as island environments.\n"]