Abstract: The scientifically and rationally delineation of fiscal authority and expenditure responsibilities in the field of science and technology is a key institutional arrangement for deepening fiscal and scientific reform, holding significant strategic importance for enhancing the overall effectiveness of the national innovation system. Against the backdrop of accelerating the implementation of the innovation-driven development strategy and building a world-class science and technology power, clarifying the roles of governments at all levels in science and technology governance and establishing a stable and efficient fiscal support mechanism are of great practical significance for stimulating societal innovation vitality and achieving high-quality economic development. This study takes the three major coastal urban agglomerations in China—representative samples with the most active innovation activities and cutting-edge reform practices—as the focus. It employs a mixed research methodology combining qualitative case analysis and quantitative empirical research: On one hand, the study conducts an in-depth analysis of the three coastal urban agglomerations, using the Hefei Comprehensive National Science Center as a typical case to outline and summarize the pathways and outcomes of fiscal authority and expenditure responsibility reforms in the scientific and technological sector. On the other hand, guided by the Reform Plan for the Division of Fiscal Authority and Expenditure Responsibility Between the Central and Local Governments in the Scientific and Technological Sector, the study constructs a difference-in-differences model and empirically examines the impact of fiscal authority reforms on innovation capacity using panel data from the three coastal urban agglomerations. Research findings: (1) The reform of fiscal responsibilities and expenditure obligations in the science and technology sector has a significant enhancing effect on innovation capabilities. This indicates that clearly defining the fiscal responsibilities of governments at various levels in different types of scientific and technological activities can effectively optimize the innovation governance structure, thereby unleashing innovation vitality and improving innovation capabilities. (2) The reform’s role in promoting innovation capabilities is primarily achieved through two mechanisms: First, it reduces the misallocation of innovation resources by optimizing the distribution of scientific and technological resources across levels and fields through more rational fiscal responsibility delineation, effectively correcting distorted resource allocation between departments and regions and improving the overall input-output efficiency of the innovation system. Second, it enhances the vibrancy of innovation and entrepreneurship by establishing a stable and predictable fiscal support framework and precisely guiding social capital, which greatly incentivizes innovation and entrepreneurial activities among various market entities such as enterprises and researchers, fostering a more dynamic regional innovation ecosystem.(3) The policy effects of the reform exhibit important amplification mechanisms. The study reveals that increasing talent recruitment intensity and boosting research and development investment intensity are two key positive moderating variables, implying that when fiscal responsibility delineation reform is combined with proactive talent policies and sustained research and development investment, its impact on innovation capabilities will be multiplicatively amplified.The findings of this study hold dual significance. Theoretically, by examining the institutional drivers of innovation capability enhancement from the perspective of fiscal system arrangements, this paper enriches the institutional economics explanation of innovation capability formation and development. Practically, the research conclusions provide direct empirical evidence and policy insights for the coordinated advancement of the new round of fiscal system reform and science and technology system reform.