Innovation occupies a central position in the overall situation of national modernization, and cities are the main areas where innovation activities are performed. Thus, scientific measurement of urban innovation capacity is critical for improving the competitiveness of cities and formulating innovation strategies. Taking 48 cities in the Yellow River Basin as research objects, we constructed a city innovation evaluation index system based on four dimensions: talent cultivation capacity, scientific and technological research and development capacity, economic support capacity, and environmental service capacity. We measured the innovation capacity of these cities using the entropy weight method, Jenks natural breaks classification method, Gini coefficient, Moran’s I index, and other data analysis methods. The spatial differentiation of the innovation level of these cities and the main obstacle factors were analyzed. The results are as follows: (1) The overall innovation capacity of the Yellow River Basin is not high, the score gap between a few high-value cities and the rest of the cities is significant, and the innovation capacity shows the trend of stepwise increment in the upper, middle, and lower reaches. (2) Taking Shuozhou-Longnan as a line, the urban innovation capacity shows a distribution of high in the southeast and low in the northwest, and the spatial distribution of each dimension tends to be consistent with the total innovation capacity. (3) The distribution of urban innovation capacity in the Yellow River Basin is in an unbalanced state, and the spatial agglomeration characteristics show positive spatial correlations, mainly belonging to the spatial pattern of low-value agglomeration. (4) The scientific and technological research and development capacity and talent cultivation capacity have a greater degree of influence on the improvement of the innovation capacity of the cities, where the number of effective inventions is a common obstacle indicator for all cities.