Strategic alliances can mitigate the constraints of resources and capabilities in the innovation processes of individual firms, but they also harbor potential risks like conflicts of interest, opportunism, and moral hazard, which necessitate effective governance. However, research on how governance structures impact the focal firm′s innovation performance is currently insufficient. Drawing on the decentralization theory and the information processing theory, this paper explored the nonlinear impact mechanisms and boundary conditions of decentralized governance in strategic alliances on the innovation performance of focal firms. The data from 236 matched pairs of focal firms and their alliance partners were analyzed using the hierarchical regression and Bootstrap methods. The study found that: (1) Decentralized governance has an inverted U-shaped impact on the innovation performance of focal firms, indicating that moderate decentralization is the optimal governance structure for enhancing innovation performance in strategic alliances; (2) Decentralized governance also exerts an inverted U-shaped impact on the alliance partners′ information elaboration, which positively affects the innovation performance of focal firms. The alliance partners′ information elaboration mediates the inverted U-shaped relationship between decentralized governance and the innovation performance of focal firms; (3) Alliance coordination capability is a key capability for focal firms to gain governance advantages. It moderates and flattens the inverted U-shaped relationship between decentralized governance and the alliance partners′ information elaboration. It also moderates and flattens the relationship through which decentralized governance affects the innovation performance of focal firms via the alliance partners′ information elaboration. These findings will offer significant managerial implications for selecting governance strategies and enhancing innovation performance in strategic alliances.