The R&D alliance approach is the keystrategy for government policy to promote industryinnovation not only at the national level but also locally.However, due to some known conflicts, needed factors,and specific climate that cause unexpected complexity inthe process of R&D alliance, the failure rate of alliancestrategy remains high. This study assumes that if thegovernmental sector is capable of playing a supportingrole and does timely intermediation in the practice oftechnology alliance it is likely that there can be newpublic service innovation for industry development.Particularly, we focus on observing how the localgovernment can perform new and needed services toencourage and support local firms to successfully initiatealliances and enhance their mutual trust to extend theircollaborative activities. We use a case study, the SouthernTaiwan Textile Research Alliance (STTRA), and weexamine its alliance process and performance. Based onour research model, the study finds that the activeinitiation and strategic intermediation from localgovernment can be one kind of valuable and expectedpublic service innovation, even though this activity is notwell understood yet. Our study also illustrates that thelocal government not only might be able to providerelevant resources with needed actions through activeparticipation but also could become a critical successfactor to enhance industry innovation in practicing R&Dalliances. Such a new role and a new scope of publicservice innovation for industry development is worthstudying to explore and evaluate its value and effects.