Innovation and regional development are both thematic areas that have come under intense national interest in the past twelve months. Universities can be key innovation actors in driving knowledge creation (through formal R&D) as well as offering support to business networking and commercialisation activities. However, small to medium enterprises (SMEs) are the national powerhouse of innovation. In regional areas, innovative activity by SMEs may not be as high as metropolitan centres, given that collaborative networks are not as dense, and knowledge creation providers may not be readily available. Consequently, where universities are present in regional areas, they have a critically important role in helping the regional SME base to achieve productivity and innovation outcomes. Unfortunately, the SME cohort has been poorly engaged in activities with the tertiary sector compared with larger industry, and there is a poor record of collaboration between businesses and researchers at the national scale. This paper will describe the interactions between CQUniversity and its regional SME base, with the objective of highlighting the drivers and barriers that influence these relationships, and how both regional universities and regional SMEs could be better supported to establish mutually beneficial relationships with each other in order to contribute to regional development and regional innovation outcomes.