The primary aim of this research is to identify cultural determinants of organizational learning and knowledge creation practices, which could be the driving factors for the innovation process in school settings (Mulford, 1998; Silins et al., 2002). A conceptual process model for school innovation was developed. In contrast to previous approaches, this research primarily focused on environmental factors and practical processes rather than on individual and policy-related components. The major factors and processes included a supportive learning culture, school autonomy of teachers and departmental collaboration in the school setting. Furthermore, as an endogenous variable of this research, a practical organizational knowledge creation process among teachers and administrators was measured. Organizational knowledge creation is the critical component for school reform and innovation. A Structural Equation Modeling (SEM) approach was used to evaluate the complex structure of the proposed research constructs. Results suggest that a supportive organizational learning culture positively and significantly impacts all three constructs, but that school job autonomy does not have a statistically significant direct impact on departmental creativity and knowledge creation practices in school systems. Conclusions, limitations and recommendations for further research are discussed. (Contains 2 tables and 2 figures.)