Innovation is the first driving force for enterprise development. Design innovation plays a positive driving roles technological innovation in this process. This paper, based on the characteristics and effects of design innovation, combining with the connotation and goal of transformation and upgrading, built a bridge between the two, and it also constructed an impacting mechanism for design innovation to drive enterprise transformation and upgrading from four aspects: the industrial chain, value chain, innovation chain and the allocation of production factors. Design innovation not only promoted enterprise transfer from manufacturing, assembly sessions to high valueadded output sessions, but also stimulated the whole innovation chain from the source together with optimizing the combination of enterprises' production factors, so as to enhance their competitive advantage, and promote their transformation and upgrading.