The regulation of functional food (FF) is essential to develop innovation in food industry and to ensure consumers' health. This study aims to identify if and how the institutional environment affects the FF R&D initiatives in Brazil. Data were collected through personal in-depth interviews with FF chain members (experts; industries; regulatory agency) and analyzed through content analysis. Three main agents were identified in the FF R&D initiatives: food manufacturer, functional component suppliers and universities. Results show a negative impact of resolutions proposed by the regulatory agency in these initiatives, but also highlight the importance of institutional factors as drivers to the innovation process. A clearer legislation is needed in order to facilitate innovations in the food sector. Moreover, the selection of the most promising partnerships can help to minimize uncertainties involved in those initiatives. Further researches on measuring the regulation impact on the innovation initiatives are suggested.DOI: 10.12660/joscmv7n1p1-14URL: http://dx.doi.org/10.12660/joscmv7n1p1-14