The three characteristics of innovation-driven entrepreneurship—cross-level, multi-actor, and iterative property—trigger several transaction issues in multiple transaction contexts. Transaction cost theory can help advance the development of the new paradigm of innovation-driven entrepreneurship. As it considers asset specificity, contractual governance, and transaction costs, it may better identify the challenges of innovation-driven entrepreneurship in different transaction contexts. Thus, it is vital to review the evolution of transaction cost theory and its application and development in the entrepreneurial field. Doing so not only aids in understanding its role in addressing innovation-driven entrepreneurship issues in various transaction contexts but also helps reveal gaps and future research directions in the field.