In light of necessary socio-ecological transformations in society, this chapter discusses the capability of universities to innovate and transform. Findings from the Sociology of Science and organization theory as well as exemplary insights from the German science system are used to explore the specific type of the organization “university,” including their capability for innovation: their ability to initiate, maintain, and stabilize fundamental, whole institutional transformation. Universities are characterized as loosely coupled expert organizations with traditionally strong boundaries toward society. Against this background, the governance of their transformation toward sustainability is described as a paradoxical “call for innovation,” which provokes tensions between internal self-organization and external requirements. A transformative university is considered an organization that actively deals with these tensions and engages in holistic processes of organizational learning. It approaches sustainability through a whole-institution perspective across research, teaching, third mission, governance, management, and communication, and develops toward a culture of sustainability. Transformative universities are embedded in the rules and incentives of the science and higher education system. Coherently integrating sustainability in universities therefore requires new ways of governing transformative changes within the broader higher education system.