Introduction. Formation and use of potential serves as a form of personification of the achieved level of productive forces and their potential for further growth; for developed countries, the syncretism of the formation and use of the potential of the country characterizes the degree of its development. Purpose. The purpose of the article is to develop a mechanism for the formation of innovative potential and to determine the boundary guidelines for the use of innovative potential. Results. The determining condition for the formation of innovation potential is the ability, willingness and ability of the economic system to innovate transformations. The mechanism of formation of innovative potential is based on the indicators that characterize the internal and external subsystem. The elements of the mechanism of formation of innovation potential include objects, subjects, tasks and properties. Formation of innovative potential of the company acts as a continuous and dynamic process, which builds new opportunities and organizational functions of stable development and reproduction in the future in accordance with the strategic tasks of the system. The use of innovative potential consists in the formation, substantiation and implementation of cost-effective innovation projects. This process is based on the following main elements: purpose, principles, barriers, results. The effectiveness of the results of the use of innovation potential is determined by the achievement of the tasks. Therefore, the mandatory step of using innovative potential should be its evaluation, which is based on the compliance of the obtained indicators of the use of innovative potential with the objectives of innovation transformation. Conclusions. The formation and use of the innovation potential of any economic system is a complex syncretic process that has certain stages, directions, elements, boundary guidelines and is aimed at the effective implementation of innovative projects for the proper development of the system itself. Prospects for further research in this direction should be the specification of the formation and use of innovative potential at different levels of economic systems.