Innovation is essential for agricultural and economic development, especially in today's rapidly changing global environment. While farmers have been recognized as innovation generators, many innovation studies continue to consider them as recipients or adopters of externally promoted innovations only. Based on household data from Ghana, this study, in contrast, investigates the innovation-generating behavior among rural farmers. Inspired by two innovation theories—induced innovation and innovation systems—we specifically focus on how to build the capacity of farmers to generate innovations. Controlling for selection bias, we show that participation in farmer field fora (FFF), a participatory extension approach, can play a positive role in strengthening farmers' innovation-generating capacity. Specifically, we show that FFF participants have about 27% higher probability of generating innovations than non-participants, and FFF participation appears to increase the number of innovation-generating practices implemented by a farm household by about 49%. However, we do not find significant spillover effects of FFF on the innovation-generating capacity of non-participants, which has implications for the cost-effectiveness of the FFF program. The results also indicate that education and risk preference are important drivers of farmers' innovations. We conclude that policies for the generation of innovations among farmers should focus on building innovation capacity through institutional arrangements that permit interactions and learning between stakeholders.