Family farms are part of the solution for ensuring long-term global food security, rural poverty reduction and environmental sustainability. Hence, promoting innovation in family farming is becoming a priority for politicians and policy makers. However, while family farms everywhere are facing major challenges in terms of succession planning, access to finance, land, markets and education, bargaining power, administrative burden and dealing with market volatility, farms in the (Central and Eastern) European and Central Asia (EECA) region have the additional challenges of dealing with the consequences of transition and learning to operate in a market economy. This paper, firstly, summarises the current theoretical discourse about the potential of national Agricultural Innovation Systems (AIS) to contribute to sustainable agricultural development in EECA. It then, explores the following challenges: (a) the demand for transition towards inclusive, decentralised and pluralistic AISs; (b) the need for a broad involvement and participation of family farmers in knowledge sharing and innovation; (c) the role of producer organisations and, in particular, service cooperatives to promote innovation on family farms; and (d) the roles of public and private investment in agricultural R&D and extension and advisory services. Based on this analysis, a set of recommendations for fostering agricultural innovation for family farms, both for governments and other actors in the AIS, are then made.