The Fourth Industrial Revolution has transformed production processes, primarily through the integration of the Industrial Internet of Things (IIoT), enabling real-time data exchange across the value chain. While large corporations often lead this transformation, small and medium-sized enterprises (SMEs), especially in the mechanical engineering sector, face challenges in adopting IIoT due to limited resources and compatibility issues. This empirical study investigates the current state of IIoT adoption within SMEs in Germany in this sector, employing a mixed-methods approach that combines a systematic literature review with quantitative and qualitative data from surveys and expert interviews. Our research focuses on five core areas: implementation levels, driving forces, digital infrastructure readiness, potential benefits and challenges, and recommended measures. The findings reveal low IIoT adoption rates among SMEs, driven by internal motivators and hindered by factors such as insufficient digital infrastructure, lack of standardized interfaces, and complex bureaucratic barriers. The study highlights the potential of IIoT to enhance transparency and efficiency but underscores the need for targeted support to overcome adoption barriers. Recommendations include standardizing IIoT frameworks, improving access to funding, and fostering innovation. This study provides a nuanced understanding of the unique challenges SMEs face in implementing IIoT and offers actionable insights for stakeholders aiming to facilitate IIoT integration in this sector.