Given the ample evidences from present studies on national-level innovation policies evolution and mechanisms, this paper contributes to a city-level understanding towards innovation-related state restructuring,the consequent innovation policy change and its relational performance with urban development in post-reform Shanghai, China from an inputoutput perspective. It unfolds that state restructuring relinquishing state power to the market has revived non-government innovation activities and a synchronous, though a bit backward, firms-oriented transition towards innovation development in Shanghai throughout 1990s has been observed.Though scholars are reluctant to label the party-state in post-reform China as a developmental state due to dysfunctionality of state intervention in corporate sectors, in the field of technological upgrading, such topdown, elite driven and state-sponsored mode giving priority to innovation competitiveness well captures the developmental state model at local level, thus exhibits elements of local developmental state. Impacts of this restructuring and policy change are substantial, which can be observed in the soaring increase of science and technology expenditures and patents applications in Shanghai. Additional analysis further unveils that in most circumstances, innovation growth kept paces with urban development, yet its synergy with economic development and permanent residents is more significant than with other aspects.