Abstract: As China continues to make significant breakthroughs in critical and strategic technological domains, the transformation of scientific and technological achievements into practical applications has emerged as a pressing national priority. Effectively overcoming the challenges in the commercialization of such key technologies is increasingly recognized as a central driver for translating scientific progress into productive capacity and national competitiveness. However, the process by which core technological innovations evolve into complex, market-ready systems remains insufficiently understood, particularly in the context of large-scale, high-stakes industrial applications. This study addresses this gap by adopting an iterative innovation perspective and conducting an in-depth case analysis of the“Wellleader+Drilog”system—an exemplar of China’s national strategic equipment developed by China National Offshore Oil Corporation (CNOOC). Through longitudinal case evidence, this study reveals the underlying mechanisms that shape the transformation of critical core technologies into high-end industrial solutions. First, the process of technology commercialization follows a logic of “iterative foundation–iterative process–iterative outcome,” advancing through a three-stage trajectory: (1) basic function realization, where core technical principles are translated into rudimentary product forms; (2) complex function expansion, in which capabilities are enhanced and diversified to meet operational complexity; and (3) differentiated function leadership, where innovation enables the development of unique product attributes that serve as competitive advantages in strategic scenarios. This dynamic evolution highlights how the iterative nature of innovation supports both technical maturity and functional sophistication over time. Second, the transformation path is shaped by stage-specific innovation patterns, characterized as “validating iteration–adaptive iteration–collaborative iteration.” These correspond to distinct transformation goals: the initial stage focuses on converting technical feasibility into operational usability; the middle stage emphasizes improving reliability under varying operational conditions; and the final stage aims to achieve optimal fit between technology capabilities and complex industrial application scenarios. This staged approach not only facilitates technological adaptation and refinement but also ensures that products are increasingly embedded within their target environments. Third, the product development process in the transformation of scientific and technological achievements follows an iterative logic grounded in the framework of “function analysis–behavior construction–structure output.” Specifically, at the functional level, product goals are defined in terms of three core objectives: the realization of basic functions, the correction of functional deviations, and the coordination of functions across complex application scenarios. At the behavioral level, the development process involves exploring the mapping logic between system components, understanding the effects of component interactions, and replicating effective architectural configurations to construct a coherent product system. At the structural level, the process produces outcome-oriented outputs including deviation calibration, standard refinement, and system-level architecture construction. These three dimensions—function, behavior, and structure—form an integrated design logic that is continuously refined through recursive feedback loops at different stages of the development cycle, thereby enabling iterative innovation and progressive product evolution throughout the commercialization process. By illuminating the iterative innovation mechanisms underpinning the commercialization of a critical core technology in a complex industrial setting, this study contributes to the theoretical advancement of research on science and technology transformation and industrial innovation. It offers practical implications for policymakers, R&D managers, and firms seeking to accelerate the transition from technological invention to scalable, high-performance product systems. In doing so, it provides a structured roadmap for enhancing the effectiveness of national innovation systems and supporting the industrialization of strategic technologies in emerging economies.