An evaluation system for innovation capability of Small and Middle-sized Enterprises (SMEs) based on innovation process was established. 235 SMEs in northeast China were analyzed empirically to explore their innovation capability structures and the index of innovation capability. On the basis of innovation output and innovation process, two different evaluation systems were compared. It is concluded that an evaluation system based on innovation process is more suitable to SMEs. Innovation capability was classified into three aspects: innovation realized capability, innovation diffused one and innovation initiated one, after using explore factor analysis. An evaluation model of innovation capability in SMEs is proposed. The evaluation index of innovation capability in SMEs was also computed by factor analysis model.