Organizations increasingly acknowledge that innovation is a strategic necessity for maintaining competitiveness in rapidly changing digital markets. IT portfolio management (ITPM) has emerged as a crucial mechanism for allocating resources across IT applications, infrastructure, and emerging technologies to maximize innovation output. This study examines existing ITPM models and proposes a multi-layered “Innovation-Centric IT Portfolio Model (IC-IPM)” that integrates risk, strategic alignment, innovation potential, and dynamic value realization. Using an extensive review of literature and conceptual modeling, the study identifies gaps in current ITPM frameworks and presents a comprehensive model that prioritizes innovation generation while balancing operational stability. The proposed framework provides actionable insights for business leaders, CIOs, and innovation strategists.