The aim of this study is to investigate how innovative capabilities of the firm affect eco-innovation from a dynamic capability lens. We build on OECD research to conceptualise eco-innovation as the capacity with which firms modify, redesign, and create products, processes, procedures, and organisations in order to reduce environmental impact. We propose and test the temporal and relational properties of eco-innovation as a capability. We demonstrate that eco-innovation possesses two properties of innovative capabilities, namely, persistence over time and interrelation with other innovations. We thus shed new light on the mechanism through which firms engage in eco-innovation. We also provide empirical evidence to the debate on the relationship between the “normal” innovation (technological or nontechnological) and eco-innovation. We show that eco-innovation and innovation are interrelated both simultaneously and sequentially. Moreover, we show that innovation capabilities and eco-innovation are not only related, but they also have a complementary nature, which facilitates the development of future eco-innovation.