Innovation capability has become a critical factor for organizational performance and sustainability, particularly within public sector institutions facing rapid technological, economic, and social changes. This study examined the effect of organizational agility on innovation capability in Parastatals, with a focus on the Kenya Ports Authority (KPA). Specifically, the research investigates how four internal organizational factors, leadership style, organizational learning, technological infrastructure, and knowledge management, individually and collectively influence innovation capability. The study was guided by Transformational Leadership Theory, Organizational Learning Theory, the Technology Acceptance Model, and the Knowledge Based View of the firm. A descriptive correlational design will be employed, targeting employees of the Kenya Ports Authority at the Inland Container Depot (ICD) Nairobi. Data was collected using structured questionnaires, and analysis involved descriptive statistics, regression techniques. The demographic results showed a balanced representation in gender, age, and job levels, with a majority of respondents having more than six years of experience, indicating a stable workforce. Descriptive analysis revealed that leadership at KPA promotes collaboration and vision sharing but falls short in supporting risk taking and experimentation. Organizational learning was moderately strong, with continuous training and a culture of improvement being evident, though the application of lessons from past experiences was limited. Technological infrastructure was found to simplify processes and support innovation but required more frequent system updates and enhanced ICT training. Knowledge management practices contributed to problem solving and innovation but were hindered by weak systems for knowledge storage and accessibility. Inferential analysis showed a strong relationship between the four predictors and innovation capability (R = 0.832), with 69.1% of the variance in innovation capability explained by the independent variables. Regression analysis revealed that organizational learning (B = 0.394, p = 0.000), and knowledge management (B = 0.341, p = 0.000) had positive and significant effects. ANOVA results further confirmed that the model was statistically significant (F = 104.206, p < 0.05). The study concluded that while KPA has made significant progress in promoting innovation through learning, technology, and knowledge management, leadership practices need to be restructured to encourage creativity and employee empowerment. Organizational learning emerged as the strongest driver of innovation capability, indicating that continuous training, reflective practices, and cross departmental collaboration are vital for fostering adaptability. The study recommended adopting transformational leadership approaches, investing in staff ICT training, upgrading digital systems, and developing robust knowledge management repositories. Policy recommendations included reducing bureaucratic barriers, embedding innovation into strategic plans, and creating mechanisms to empower employees to participate in innovation initiatives.