Universities have traditionally been leaders in the field of knowledge production, research, and societal development. They are expected to be drivers of innovation, thereby contributing to the development of a learning society. The array of challenges facing universities in Nigeria and other developing countries forces one to question their levels of innovation. While knowledge management has been identified as a strategy for driving innovative processes in business organizations, there is a paucity of literature on its application in Nigerian universities. This paper, therefore, proposes a conceptual model which Nigerian universities could adopt, in order to drive innovation and performance. As the paper is conceptual in nature, a literature survey was conducted to examine the concept of knowledge management and its application in higher education institutions. Findings from the literature informed the development of a conceptual model describing ways in which universities can adopt knowledge management practices and strategies in order to drive innovation and improve performance. The conceptual model proposed in this paper could serve as a basis for empirical investigations on knowledge management processes in universities. The paper concludes that, while knowledge management has the potential for improving performance within universities, the proposed model must be subjected to empirical validation for further amendments and improvements.