Globalisation is profoundly changing economic development, forcing development officials to adopt a regional approach founded on what a particular region does best or its competitive advantage. Globalisation has also placed a new premium on innovation as the critical fuel to economic success – for firms, regions and countries. Universities lie at the nexus of these two powerful trends: they are rooted in regions, and they are perhaps the most important engines of innovation. Drawing on recent experience in the United States, this paper explores this nexus by addressing three critical questions: (1) Why is regional competitiveness the new paradigm for regional development? (2) What must regions do to compete? (3) What can be done to connect university innovation with regional development? The paper concludes that new mechanisms are needed to connect university innovation with regional development. Public policy can encourage these mechanisms by addressing twin needs in the newly forming “market” for regional innovation: encouraging universities to make innovation available in ways that regions can easily tap, and helping regions understand which innovations are most critical to their economic future.