Indonesian MSMEs currently have very serious challenges and problems that are different from the previous economic crises that occurred in Indonesia. MSME performance has decreased during the Covid-19 pandemic by 30%. However, the Bungo Regency MSME Business Performance has decreased with a smaller percentage of 20% when compared to the percentage decline at the national level. There are still many MSME actors who are reluctant to innovate even though innovation is very important and only 10% of MSMEs use digital marketing even though government policies lead to an increase in the use of technology, at least 17.2% of MSMEs must be technology-based. The purpose of this study is to analyze the influence of innovation and digital marketing on the performance of MSMEs directly and indirectly and to analyze the effect of government policy as a moderating variable. The sample in this study amounted to 85 MSME actors. Data were analyzed using SEM PLS. From the test results, it is found that innovation does not directly affect the performance of MSMEs, but has an indirect effect on the performance of MSMEs through digital marketing. Meanwhile, digital marketing variables and government policies directly affect the performance of MSMEs. Government policy variables are not able to moderate the influence of innovation and digital marketing variables on MSME performance. MSME actors will innovate and use digital marketing at the pressure of the environment that requires them to adapt and not because of policies from the government.