The leather industry holds a significant position in the agricultural sub-sector in Kenya. The industry has a high potential to make products of high quality that can address socio economic problems, and create employment and wealth. The success of the industry depends on value addition, which unfortunately has been minimal, and most of Kenya’s exports have been in the form of unprocessed raw hides and skins. As a result, the industry has not realized its full potential. The objective of this study was to investigate factors affecting value addition in the leather industry in Kenya. Adopting a case study design, the study focused on the influence of capacity building, technology, finance and quality control on value addition. The study population consisted of both incubatees and graduate incubatees of Leather Development Centre in Kenya Industrial Research and Development Institute. The findings show that the industry is characterised by low capacity building, and unskilled employees take long to upgrade their skills on the job. The industry uses old technology, does not practice expeditious machine upgrade; and repairs and maintenance are quite slow. Further, the leather industry is inadequately financed, and quality is compromised because of unavailability of affordable chemical inputs. The study recommends that in order to increase value addition, manufacturers need to invest resources with a view to upgrading their human capital and technology. The different players in the industry should analyse weaknesses in the present national policy framework, and address the loopholes that exist.