This thesis explores innovation in the public sector at a sectoral-level as there is a perceived need for a more comprehensive public innovation approach – both theoretical and practical – in which the focus is shifted from individual innovations at an organizational level towards innovations at an aggregated level, i.e. system innovation. The purpose is to review the new Norwegian innovation policy for the public sector and subsequently discuss the strengths and weaknesses of the policy. In order to do this, an analytical framework is assembled and applied through a textual analysis of three selected policy documents which constitute the new innovation policy. The analytical framework combines the multi-level perspective from innovation studies with transition management and concepts from the literature on public sector innovation. The key point of the framework is the notion of how co-evolving developments at different levels of aggregation cause societal change. Thus, if one wants to manage system changes in desired directions, this should be done at all of the analytical levels and in the interactions between them. The analysis of the three policy documents shows that there are developments at all of the three analytical levels from a multi-level perspective, which in turn may imply system changes. The operational part of the policy, however, has a slight bias towards facilitating structures on the expense of measures aimed directly at system innovation. The current design of the policy gives the municipalities the role as innovators whereas the national level is given the role merely as a facilitator. As the policy mainly focuses on facilitating innovations at a local level, innovations at a system-level (i.e. the Norwegian public sector as a whole) are not sufficiently addressed in the policy. In turn, this may hamper one of the overall objectives of the policy which is to find solutions across the entire Norwegian public sector. The policy is also believed to have potential. One of the strengths that is pointed to is the promotion of networked governance throughout the policy. Among other things, this approach makes it possible to tap into resources throughout the public sector, as well as from outside the sector, as a wide range of actors (e.g. users or other social groups) is included in the innovation processes under this governance paradigm. Also, networked governance might represent the “next practice” which is called for in the policy.