Background: For health systems, a fundamental challenge is adapting to changes in the patterns of health services that require technological and scientific innovations. The pace of multiple and interconnected challenges mounts extra stress on medical healthcare professionals and reduces their innovative capabilities, especially in low- and middle-income countries. To enhance the innovative capability of medical healthcare professionals under stress, the study seeks any possible correlation between stress and innovation. For that purpose, we sought to investigate the effects of stress on the innovative work behavior of employees and examine the mediating effect of health and moderating effect of supervisor support. Materials and Methods: 350 medical healthcare professionals were surveyed in different hospitals in Lahore through a survey regarding stress, health, innovative work behavior, and supervisor support with a final response rate of 89%. SPSS and AMOS were used for the analysis of the data and the investigation of the combined effects of the model. Exploratory (EFA) and Confirmatory Factor Analysis (CFA) were conducted to ensure the convergent and discriminant validity of the factors, while mediation analysis was done to check the mediating role of health. Results: It has been observed that there is partial mediation of health between eustress and innovative work behavior whereas supervisor support does not moderate between eustress and health. Furthermore, the results indicate that distress is negatively associated with innovative behavior. In addition, health fully mediates between distress and innovative work behavior. If distress increases negative effects on health, then supervisor support reduces the negative impact of distress on health. Furthermore, supervisor support also reduces the negative impact of health on innovative work behavior. Conclusion: Our study outlines a hypothetical alternative situation that explains how the two emotions of eustress and distress are brought into play in the innovative work behavior of the employees. In addition, supervisors play an important role in influencing the sustainable innovation work behavior of their staff members.