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At present, the innovation development has already become the second big pull factor of the cultural industry development. The present situation and characteristics of cultural industry development in Xi’an are as follows: the proportion of added value of cultural industry rises, the number of cultural units increases steadily; Coordinated development of the cultural sector, accelerated growth in key areas; the development pattern of industry agglomeration area forms and the cultural enterprises develop rapidly. The advantages and potentials of Xi'an's cultural industry innovation and development: unique natural environment, historical and cultural resources, good economic foundation, strong support of national and local government policies, superior scientific and educational resources, convenient transportation conditions, etc. The main problems facing the innovation and development of Xi’an cultural industry are: the overall strength of the industry is not strong; the local cultural brand is lacking; the development of the industry is not balanced; the problem of talent restriction is prominent; and the cultural management system support is weak, etc. We should speed up the transformation mechanism and system guarantee of cultural resources and innovation ability of cultural enterprises, and promote the full transformation of superior cultural resources into social and economic benefits. The dynamic transformation mechanism and path analysis of promoting the innovation and development of Xi’an cultural industry: straightening out the governments cultural management function, from holding Culture to Management Culture. We should improve the investment and financing mechanism of cultural industry, and transform from government leading to non-governmental multi-channel investment and financing, and we should promote the optimization and upgrading of cultural industry structure, from diversification to specialization and branding. We should promote the cultural industry supply-side reform, from the scale return invariant to the scale reward increment transformation. Keywords—cultural industry; development potential; transformation mechanism; innovation path

Study on the Dynamic Mechanism and Transformation Path of Xi’an Cultural Industry Innovation and Development Under the New Normal