Existing classifications of public sector innovation have limitations because they are drawn from evidence and theory in private firms, and are informal or internally orientated. In this manuscript we present a taxonomy for defining and measuring innovation in the public sector that comprises two dimensions: "innovation focus" (three public value creation mechanisms of strategy, capacity and operations), and "innovation locus" (inward or outward). This result in six types of innovation: mission, policy, management, partnership, service and citizen. A preliminary validation of the typology is undertaken in a sample of 207 innovation award applicants. In conclusion propositions are presented and research and managerial implications are discussed.