Policy analysis has been commonly acknowledged as one of the most important processes for avoiding policy failure, as well as improving policy efficiency. This is especially true during the process of adopting highly uncertain new policy ideas. However, what are the analytical processes and assessment tools used by local governments to guide their adoption/rejection of innovative policies? By reviewing three cases of innovation adoption in Taiwan’s local government, this chapter not only addresses this question, but also integrates theories of policy analysis with the theories of innovation adoption. This chapter is structured around five sections: sections one through three identify the common theoretical basis for innovation diffusion literature and policy analysis. Section four describes the policy analysis cases of Taiwan’s local government innovations. Section five, concludes the chapter and offers suggestions for the decision-making process regarding policy innovations.