The State Strategy for Regional Development and the relevant regional strategies, adopted on the eve of the war, whose implementation measures were supposed to deepen and localise socio-economic processes, have stopped at the stage of searching for and forming an effective integration mechanism and efficient tools for coordinating sectoral policies in the regions and building effective self-sufficient territorial communities. In the context of the war, which is still causing constant destruction and increasing uncertainty about the possibility of stable economic development, the tasks related to the restoration of the affected territories of Ukraine and the transformation of production and business in the regional context, taking into account the requirements for European integration, are of particular importance. In strategic terms, it is possible to address these issues by selecting and applying innovative tools for the development of the regional economy. The purpose of the article is to analyse trends in regional development as the basis for economic transformation in a period of serious challenges and losses for Ukraine and to identify new approaches to the organisation of innovation, international cooperation within the framework of financial support for projects and programmes of innovative development on the path to European integration. Trends in regional development as the basis for economic transformation in the context of challenges and losses for Ukraine caused by the Russian-Ukrainian war are identified and analysed. The features and problems of the regional innovation space functioning are analysed on the example of the development of clusters, industrial parks, the formation of an IT business network, and the implementation of the digitalisation programme. Based on a systematic approach, conclusions and proposals are developed on the selection and application of innovative mechanisms for updating Ukraine’s regional policy in the direction of continuing the implementation of the decentralisation reform of public authorities, taking into account the accumulated experience and challenges on the path of European integration.