The main directions of modernization of library business and development of innovative activity of libraries under the influence of this process in the 90s and the decades following them are considered. The relationship of these basic vectors of development of the industry has not actually been the subject of special consideration. The article is an experience of system analysis of innovative practices of Russian libraries in the context of modernization as a global process of transformation of social development. The concept of "modernization of librarianship" is defined as a complex process that includes not only the computerization of the industry, but also its socio-cultural, institutional, managerial, functional and organizational transformations. The features of the initial stage of transition of domestic libraries to the path of modernization are characterized. It is noted that in accordance with the General trends of modernization, the domestic library business at the turn of the Millennium moved from linear progress, i. e. extensive development path to intensive, providing for qualitative transformations of the industry. The article presents external and internal modernization factors that influenced the innovative changes in the industry. The main trends in the development of library innovations are highlighted, which have enriched the implementation of the basic social functions of libraries in terms of content and technology: information, memorial, educational, cultural and educational, social and communicative. The article highlights the main trends in the development of innovations that affected the basic social functions of libraries: information, memorial, educational, cultural and educational, social and communicative. The article analyzes the socio-targets, tools and content of functional transformations of libraries. It is concluded that modernization, as the general vector of the development of the industry, is the main stimulus for library innovations, which, in turn, are its practical implementation in the processes of functioning of libraries.