One of the problems with the growth of batik industrial clusters in Indonesia is the interest of business owners to consistently develop new ideas and creativity through product and process innovation. This problem causes most of the IKM Batik in the industrial cluster to experience a decline in turnover and difficulty meeting customer needs and desires. This study focuses on the function of knowledge management as a mediator and tries to develop a conceptual model that describes the impact of entrepreneurial orientation, industrial cluster, and knowledge management on the innovation performance of the batik industry cluster. This study uses the SEM PLS method to test the effect of these variables. The test results show that entrepreneurial orientation and industrial clusters significantly affect innovation performance, and knowledge management is a mediator of this influence. The study's findings might be consulted when developing a plan to boost the effectiveness of innovations in the batik industrial cluster.