To study the product design innovation based on the value engineering theory. According to the problem of product innovation， it proposed the value engineering theory， used the comprehensive research approaches such as system analysis，system induction，system evaluation and theoretical modeling. The product design innovation is the overall innovation including the value innovation，function innovation and cost assessment innovation in the whole life-circle of a product. Through innovation，the product function can be optimized through innovation， the cost of the product can be reduced， and through innovation， the social value of the product can be maximized， and reliable criteria for value innovation can be obtained.