This chapter describes the characteristics and idiosyncrasies of innovation communities. Innovation communities are noncommercial groups whose members informally and voluntarily participate in the joint generation, development, and application of new knowledge and potentially innovative products. They differ from hierarchical or marketlike relationships where contractual agreements usually regulate how relevant knowledge may be used and by whom. The outcomes from collaborative efforts are made accessible to other community members. Thus, openness and reciprocity are guiding principles for reproducing community relationships acknowledged by all participants. Innovation communities are particularly evident in decentralized innovation processes, where community-based coordination’s structural and practical characteristics enable open, reciprocal, and cumulative knowledge exchange. This chapter describes the latent tension in innovation communities between open and free knowledge exchange and its commercial exploitation. Thus, it locates community-based coordination in the context of overarching innovation systems.