Canada has a national network of over 150 colleges and institutes in over 900 communities in all regions of the country. These institutions are mandated to support the socio-economic development of the communities and regions. Colleges and institutes develop education and training programs to meet employer needs with direct input from business, industry, and community partner organizations. In order to define and capture the level and scope of applied research activity that colleges and institutes are currently performing, the Association of Canadian Community Colleges (ACCC) led an on-line survey of member institutions in January - March 2006. This report provides some insights on the impacts and outcomes of college and institute applied research on local and regional economic and social development, with particular emphasis on how colleges and institutes are meeting the innovation, research and development needs of industry and community partners. Study results demonstrate that colleges and institutes have expertise, community, industry and business linkages and the responsiveness to excel in the area of applied research and innovation. Colleges and institutes are developing and implementing solutions in a wide variety of sectors ranging from health, environment, agriculture, renewable energy, manufacturing, information and communications technology, virtual reality and advanced visualization, multi-media, manufacturing, marine and aquaculture, teaching, humanities and social sciences. Despite limited governmental financial support, colleges and institutes are going ahead and putting in place the necessary infrastructure and support mechanisms so that they can undertake applied research and respond more effectively to the full range of local business, industry and community needs. However, colleges and institutes are unable to expand their applied research and innovation activities to the degree necessary to meet increasing demands because they face systematic barriers to the number of faculty, facilities and institutional resources that they can allocate to applied research, innovation and commercialization activities. The paper advocates that the diversity of expertise developed by colleges and institutes indicate that the time has come for both the provincial and federal governments to support programs that will address the barriers preventing colleges and institutes from unleashing their full potential in applied research and innovation and hence maximize their contribution to the social and economic well-being of the country.