Japanese economy has been suffering from a long-term structural recession since the collapse of the economic bubble in early 1990s. The Japanese Government has been tackling the economic difficulties by creating a new innovation system through various policies; the strategic utilization of knowledge, the cooperation among industries, universities and governments; the promotion of venture companies; the creation of industrial clusters, etc. This paper aims to examine the present situation of cooperation among industries, universities and governments in Okayama Prefecture and to identify policy issues to promote a regional innovation system. A questionnaire survey to enterprises in Okayama Prefecture was conducted in August 2002. The findings have revealed that local universities have been playing important roles in the research and development activities with private enterprises despite the lack of information. The effective measures to promote the strategic utilization of local universities are necessary to create a regional innovation system in the prefecture.