Abstract Purpose: Increasing competition in global markets requires many countries to seek new growth sectors. In addition, the nature of competition is changing. This paper applies the business ecosystem concept and studies San Diego as a spatial health and life sciences ecosystem. The purpose of this paper is to identify issues that should be considered in design of innovation policies and regional industry development. Design/methodology/approach: The research approach is built on a literature review of business ecosystems and spatial innovation. The empirical study is based on semi-structured interviews, observations, and information gathering and verification during field research. Findings: The results include a description of the ecosystem structure and dynamics. This paper demonstrates the bottom-up nature of San Diego’s health and life sciences ecosystem without a dominant lead actor, and presents prerequisites for fostering spatial ecosystems. Research limitations/implications: A single case may not be able to offer a generalized picture of this topic. However, the study raises several considerations for researchers and decision-makers involved in innovation policy design. Future work should extend the study and involve other spatial and substance contexts to compare findings and to pursue a more generic picture of innovation ecosystems and networks. Originality/value: This paper demonstrates that applying the concept of business ecosystems to the spatial context provides new insights in terms of dynamic mechanisms and factors contributing to economic growth in a particular location. Understanding how to facilitate the creation of successful spatial ecosystems is in the focal point of innovation policies.