This dissertation is a compilation of five papers that analyse and discuss the managerial challenge of environmental innovation. Environmental innovation seeks to integrate environmental features into products and thus bring new products with better environmental performance to the market. The dissertation reports on three case studies within the electrical equipment and automotive sectors. The first case refers to development of an innovative new gasoline-electric hybrid power train; the second case refers to the development of a new industrial gas turbine, comprising advanced new burner technology; and the third case describes the introduction of new technology for small-scale distributed electricity generation. On the basis of concepts and theoretical models derived from literature on innovation management, the dissertation offers two alternative ways to conceptualise environmental innovation. Firstly, environmental innovation is conceptualised as product development. This is useful to analyse the inner dynamics of R&D organisations and it hightlights the need to adapt organisations and managerial practices to the specific requirements of the development task. Secondly, environmental innovation is conceptualised as the introduction of new technology. Here, two alternative perspectives are discussed. The incumbents' perspective illustrates that environmental innovation may be perceived as a potential threat for existing manufacturers within the established industry and it is used to discuss their strategic responses. The entrants' perspective shows how the definition of early markets and applications is complicated for suppliers who are engaged in environmental innovation. The dissertation argues that environmental innovation is characterised by extensive complexity both in terms of technological complexity and complexity in shaping of demands on technological progress. It concludes that is is important for managers to create an ability to deal with complexity. Based on empirical findings, three possible approaches are outlined: simplification, interaction and experimentation.