This study examined the relationship between youth innovation and economic transformation in Uganda, interrogating the structural, institutional, and human capital factors that either unlock or constrain the transformative potential of young Ugandans. Drawing on a cross-sectional survey of 400 youth entrepreneurs, innovators, and policymakers across five regions of Uganda, the study employed univariate descriptive statistics, bivariate Pearson correlation analysis, ordinary least squares (OLS) multiple regression, and structural equation modelling (SEM) to establish the magnitude, direction, and mediation dynamics of key relationships. Findings revealed that the Youth Innovation Index was the strongest predictor of economic transformation (β = 0.342, p < .001), while digital skills (β = 0.261), access to finance (β = 0.198), and the policy environment (β = 0.174) also exerted statistically significant effects. SEM results confirmed that youth innovation served as a partial mediator between access to finance, digital skills, and economic transformation, with significant indirect effects observed (β = 0.093 and β = 0.109 respectively). The overall regression model explained 61.4% of the variance in economic transformation outcomes (R² = 0.614, F(5, 394) = 125.36, p < .001). The study concluded that youth are indeed the primary keyholders to Uganda's economic transformation, but their potential is contingent on systemic investments in digital education, finance access, mentorship infrastructure, and a responsive policy ecosystem. The study recommended targeted digital skills integration in national curricula, the establishment of a dedicated youth innovation fund, and the institutionalization of mentorship frameworks within government and private sector programmes.