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The delivery of public services in collaborative agency networks has given rise to an increasing use of projects in administering policy and service delivery. Projects are assumed to provide mechanisms by which flexibility can be achieved and innovative solutions produced. The aim of the article is to advance the understanding of collaboration between stakeholders and its effect on innovation. It analyses stakeholders’ influence on the creation of project innovations in 275 European Union-funded projects by using content analyses and logistic regression analyses. The results show that projects can act as hubs where valuable information is produced but that few projects produce innovations. Project stakeholder network, knowledge dissemination and project influence, as well as sources of advice, play a role in predicting project innovations. The article concludes that the overly optimistic view of collaboration as a remedy for a lack of innovation in the public sector can be questioned.Points for practitioners:The results of the article help practitioners to compose public sector development projects that foster innovation. The results suggest that it pays to include representatives of research and education facilities among project staff as their inclusion predicts the possibilities of achieving innovations. The empirical findings provide insight into project innovation and indicate which practices to avoid. It is suggested that when managed correctly, stakeholder inclusion has an effect on public sector project innovation