Innovation in Extension is often referred to as something tangible, such as a new resource or technique or new concepts. However, these things result from a program innovation process. In this article, we elaborate a grounded theory of how this process unfolds in the context of Extension. Through analysis of data from a national survey of practitioners from innovative programs, a panel presentation, and interviews with faculty at the University of Minnesota, we describe seven factors that influence what prompts innovation and how the process tends to unfold. We synthesize a capitals-based conceptual model and discuss implications for diagnosing and strengthening program innovation.