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Drawing on the resource-based view, new public management theory, and innovation systems theory, this study examines the relationships between internal control systems (ICSs) and organizational performance in Vietnamese public sector organizations (PSOs), with particular emphasis on the mediating role of intensity of innovation and the moderating role of transformational leadership. Data from 319 PSOs in Vietnam corroborated our hypothesis that ICSs boost the intensity of innovation, which has a beneficial effect on organizational performance. Additionally, data demonstrated that intensity of innovation fully mediated the relationships between ICSs and organizational performance, and that transformational leadership reinforced the mediating relationships. The findings have implications for our understanding of the function of leadership and ICSs in managing innovation and promoting performance in PSOs in emerging markets.