It is becoming increasingly recognized that our collective ability to tackle complex problems will require the development of new, adaptive, and innovative institutional arrangements that can deal with rapidly changing knowledge and have effective learning capabilities. In this paper, we applied a knowledge-systems perspective to examine how institutional innovations can affect the generation, sharing, and application of scientific and technical knowledge. We report on a case study that examined the effects that one large innovative organization, The Global Fund to Fight AIDS, Tuberculosis, and Malaria, is having on the knowledge dimensions of decision-making in global health. The case study shows that the organization created demand for new knowledge from a range of actors, but it did not incorporate strategies for meeting this demand into their own rules, incentives, or procedures. This made it difficult for some applicants to meet the organization's dual aims of scientific soundness and national ownership of projects. It also highlighted that scientific knowledge needed to be integrated with managerial and situational knowledge for success. More generally, the study illustrates that institutional change targeting implementation can also significantly affect the dynamics of knowledge creation (learning), access, distribution, and use. Recognizing how action-oriented institutions can affect these dynamics across their knowledge system can help institutional designers build more efficient and effective institutions for sustainable development.