Innovation has become one of the main driving forces of social and economic development, and innovation clusters are crucial supporters for innovative development. Introducing collaborative innovation theory, this paper proposes an important mechanism for the implementation of innovation, and it has theoretical guiding significance for the interpretation and optimization of the spatial effects of innovation clusters. Based on an analysis of the operational mechanisms of collaborative innovation, we explain the formation mechanism and spatial law of innovation clusters from the aspects of innovation environment, innovation subject and collaborative innovation relationship. Then, taking the Dream Town of the Yuhang District in Hangzhou, China, as an example, this paper studies the mechanism of collaborative innovation effects, specifically in physical space design and policy making. With the goal of promoting innovative development, this paper analyzes the influencing factors and mechanisms of the collaborative innovation effect from the aspects of strategic orientation, knowledge integration and innovation and environmental collaboration. At the same time, it summarizes the existing problems of the base, and proposes three aspects: policy orientation, university cooperation and space optimization. The corresponding optimization strategy aims to drive the synergistic innovation effect from the aspects of space and policy, and to provide the impetus for the economic development of the innovation cluster. Through collaborative innovation, we can form a better protection and support environment for innovation subjects, and each of them can break the boundaries of departments, units and industries to achieve the optimal allocation of innovative resources. Collaborative innovation theory is an important theoretical tool to explain the development mechanism and cooperation mode of the innovation cluster area, and also has important guiding significance for the physical planning and construction of innovation clusters.