The Finnish VET system was heavily school-based until 2001, when systematically organised workplace learning periods were introduced. The implementation of on-the-job learning has challenged educational establishments and workplaces to develop closer interconnections and action networks. The purpose of the present study was to examine networking between working-life organisations and providers of vocational education and training. In particular, the aim was to examine whether such cooperation generates innovative practices and leads to functioning networks which can be characterised as "innovative knowledge communities" (Hakkarainen et al., 2004). One important feature of innovative knowledge communities is that people and organisations form and utilise social networks in their work. Thus, the study of networked learning has emerged as a new branch of learning research (e.g. Holmqvist, 2005; Hytönen & Tynjälä, 2005; Knight, 2002; Vesalainen & Strömmer, 1999; Tynjälä et al., 2005). The broadest context for collective learning has come from organisational research and studies on economic geography which have launched the term "learning region". The term refers to joint effort to promote knowledge creation and innovativeness at the level of geographical regions, such as cities and provinces (Morgan 1999; Gustavsen, Ennals & Nyhan 2006).A learning region provides an environment that encourages organisations, individuals and their networks to learn from each other. The present study was carried out in Central Finland where education providers have put a lot of effort in promoting cooperation between education and working life with the aim of contributing to the development of a learning region. The data were collected with questionnaires and interviews from teachers (n=330), workplace trainers (n=420), and project managers and other key actors (n=28), and were analysed both qualitatively and quantitatively. The results of the study indicate that both in the vocational schools and in the work organisations working practices and the work climate were propitious for innovativeness, and that many change processes were initiated and carried out through networked activities. However, the practices of work organisations were more supportive for innovative knowledge communities than those in VET institutions. A model describing the creation and dissemination of innovations is presented.