<p>This study examines the systematic use of Indigenous Knowledge (IK) to foster innovation and sustainable development in Ghana’s informal sector. Employing a sequential explanatory mixed-methods design, quantitative data were collected from 300 informal-sector participants in Ghana, supplemented by 30 qualitative interviews with principal knowledge custodians and stakeholders. Quantitative results show a strong reliance on IK (90.38%). IK was shown to have a significant effect on innovation outcomes: 84.63% said it helped them develop new or better products and services, and 84.13% said it helped them develop creative solutions to problems. Apprenticeship and the utilization of libraries, archives, and museums have been identified as the most effective strategies for preserving IK (mean = 84.13%), succeeded by storytelling and knowledge recognition mechanisms (mean = 82.25%). Socioeconomic analysis indicated that IK significantly enhances food security, health, and community well-being (mean = 84.75%) and promotes environmental sustainability through resource conservation and waste reduction (means = 77.57% and 76.13%, respectively). The most important problems were a lack of government and institutional support (mean = 86.00%) and a lack of integration with modern technologies (mean = 62.13%). The study provides substantial empirical evidence that IK is a crucial yet insufficiently supported catalyst for grassroots innovation and sustainable livelihoods, underscoring the need for intentional policy integration into Ghana’s national innovation and development frameworks.</p>