This paper explores the spatial distribution of innovative activity across 138 regions of 17 countries in Europe (the 15 members of the European Union plus Switzerland and Norway). The analysis is based on an original statistical databank set up by CRENoS on regional patenting at the European Patent Office spanning from 1978 to 1997 and classified by ISIC sectors (3 digit). In a first step, a deep exploratory spatial data analysis of the dissemination of innovative activity in Europe is performed. Some global and local indicators for spatial association are presented, summarising the presence of a general dependence process in the distribution of innovative activity. Such an analysis is also implemented for different manufacturing macro-sectors to assess for the presence of significant differences in the their spatial features. Moreover, the extent and strength of spatial externalities are evaluated for three different periods: 1981-83, 1988-90 and 1995-97. Finally, we attempt to model the behaviour of innovative activity at the regional level on the basis of a knowledge production function. Econometric estimation findings seem to prove that internal and external factors are important in the production of knowledge and technology by European regions.