The study intended to find out the effect of product innovation and competitive advantage in manufacturing firms in Nairobi County. The study sought to do this through: -establishing the effect  of  number   of products  redesigned   on  the  manufacturing  firms’ competitiveness in Nairobi   County,   to   establish   the   relationship   between   product   innovation   and   the manufacturing firms’ competitive advantage in Nairobi County and to find out the drivers of innovative products and competitive advantage of manufacturing firms in Nairobi County. A descriptive   research   design   was   employed.   The   study’s   target   population   was   378 manufacturing firms in Nairobi County. A sample of 45 manufacturing firms was used in the study. The study used a questionnaire to gather primary data. The study employed descriptive statistics   in   analyzing   data   which   include   measures   such   as:-means   frequencies   and percentages. The study found that:-On the effect of number of products redesigned on the competitiveness of manufacturing firms, the study concluded that product redesigning leads to increase in quality and therefore making the product have competitive advantage. It can be concluded from the findings that quality control is the most important component for product differentiation   and   competitiveness   for   MSME   manufacturing   firms.   For   that   the   study concluded that the following factors were the main drivers: -quality, cost leadership, product differentiation, innovating new products and improve customer values through lower prices which allows firms to gain competitive advantage. The study also recommends that there is need for continuous improvement of products so as to meet the varying needs of the users’and to maintain  a  competitive advantage.The  main  limitation encountered   was  obtaining information from most MSME due to the nature of the privacy of their data and fear of competitors accessing the data.