One of the industries that is quite vulnerable to the changes of consumer demand is fashion industry. In the fashion industry, the life cycle of a product is short, and differentiation advantages are built on brand image and product style, which can be imitated immediately. The importance of innovation for small and large firms in the developed and developing countries has provoked an immense interest of social scientists and practitioners to scrutinize this topic from many perspectives. In this study, we suggest that to propel innovation in the fashion industry, instead of individual work, teamwork is an ideal frame to foster the successful of new products development. Previous study stated that teamwork is essential to sustain the realization of the new product since it involves many areas of section. Thus, in this study, we try to explore to which extend teamwork may augment innovation in SMEs fashion industry in Indonesia. Moreover, even though a fashion industry is a business driven by art and passion, we also argue that reward is an essential factor for driving innovation. Hence, we also explore to which extend reward may strengthen the relationship between teamwork and innovation. According to the authors knowledge, despite a few of literature studies about teamwork and reward to innovation, but the teamwork and reward have been analyzed separately. Since all the team can get reward from the success of innovation, and it gives them more motivation to innovate, thus we proposed that reward could strengthen the impact of teamwork to innovation. Using ordinary least squares (OLS)- regression analyses, 50 designers from SMEs in distro- fashion district in Bandung - Indonesia were asked to complete the questionnaires. The result shows the impact of teamwork on innovation is moderated by reward, but in a negative way and the result has advanced the prior studies on innovation.