Abstract: During the process of a firm’s innovation, internal and external knowledge heterogeneity(KH) will lead to different innovation performance, and also the above relationships can be moderated by strategic flexibility. Using a survey data of 261 firms from innovation-intensive industries in east China, this study examines the direct impact between internal and external knowledge heterogeneity and innovation performance and the strategic flexibility’s moderating effects between the two. The empirical research results show that there is an inverse U-shaped relationship between external KH and innovation performance, but internal KH has only a linear effect on innovation performance, rather than providing evidence of a curvilinear effect. In addition, we also find that different types of strategic flexibility, including resource flexibility and coordinate flexibility, have different moderating effects on the relationship between internal and external knowledge heterogeneity and innovation performance. Furthermore, resource flexibility only positively and significantly moderates the link between internal KH and innovation performance, while coordinate flexibility only positively and significantly moderates the effect of external KH on innovation performance. This study provides a theoretical basis and an effective approach for enterprises to effectively apply internal and external knowledge and improve innovation performance.