["Review of Development Economics, EarlyView. ", "\nABSTRACT\nThis study examines the impact of industrial robots on incremental and radical innovation, motivated by the increasing role of robotics in transforming firm‐level innovation practices. Using a panel dataset of Chinese listed firms from 2007 to 2019, our findings indicate that industrial robots promote both types of innovation, with variations based on firm and industry types. Specifically, we identify absorptive capacity and knowledge diversity as key mediating mechanisms through which industrial robots enhance incremental and radical innovation. Industrial robots facilitate incremental innovation by increasing related knowledge diversity and radical innovation by enhancing unrelated knowledge diversity. We also find that intellectual property rights (IPR) protection positively moderates the relationship between industrial robots and radical innovation, while having no effect on the relationship between industrial robots and incremental innovation. Furthermore, heterogeneity analysis reveals that industrial robots: (i) enhance incremental innovation in non‐state‐owned firms and low‐ and medium‐tech firms, but do not affect radical innovation in these firms; (ii) improve incremental and radical innovation in state‐owned and high‐tech firms; and (iii) benefit firms in highly competitive industries more than those in low‐competitive industries in terms of both incremental and radical innovation.\n"]