Hydropower, a renewable energy resource, underpins China’s economic and social advancement, gaining prominence amidst the country’s energy structure metamorphosis. Enhancing the performance of hydropower development projects is imperative, with the mechanisms of learning and innovation wielding a substantial impact. The extant literature on how learning and innovation affect hydropower project performance remains nebulous, lacking a systematic model to elucidate these impact mechanisms. This investigation melds theoretical analysis with the idiosyncrasies of hydropower project development, forging a theoretical model to decipher the interplay of learning, innovation, and project performance. Employing a mixed-methods approach, we probe the influence of organizational learning orientation and individual learning on participant capabilities, engineering innovation magnitude, and overall project performance. Path analysis divulges that organizational learning orientation catalyzes individual learning, jointly enhancing engineering innovation and project performance directly, although the effect on each participant’s capability necessitates mediation through the engineering innovation level. This pioneering study establishes the links and influence trajectories between learning, innovation, and project performance, systematically delineating them. It fills a scholarly void in exploring learning and innovation mechanisms within hydropower project development, propounding strategies to augment project efficiency and furnishing pragmatic, constructive insights for better engineering practice outputs.