The links between transport development and economic growth have been widely discussed in the field of transport governance and economics. However, the existing studies have not included an institutional variable when exploring the role of transport development in innovation disparities within a region. In order to fill the research gap, this paper examines whether transport development and the institution of intellectual property rights (IPRs) can assist in understanding disparities between cities in terms of innovation, using the Yangtze River Delta Region (YRDR) as a case study. The impact mechanism is twofold. Firstly, transport development can affect institutions, including IPRs protection, which in turn has an influence on innovation. Secondly, evidence from existing economic literature suggests a link between transport development and innovation through economic agglomeration, production factors and industrial flows. We first employ ordinary least squares (OLS) regression to test the basic associations between transport development and innovation. We then apply two-stage least squares (2SLS) regression analysis to address endogeneity and add a spatial model to examine neighbour effects. The findings show that IPRs protection has a positive effect on patenting and research and development (R&D), while the roles played by transport development stock and density in patenting and R&D are more mixed. Moreover, our findings on neighbour effects show that agglomeration economies exist in the YRDR. These findings have important policy implications regarding urban agglomeration for both the YRDR specifically and China overall.