Promoting the transformation of basic research results in universities has become an important strategic task to promote the construction of an innovative country in China, and an important initiative to realize China’s scientific and technological self-reliance and self-improvement. In this paper, the impact of basic research in universities on innovation knowledge spillover is investigated by using the DID model with the exogenous shock of setting up technology transfer institutions in universities, using the database of Chinese industrial enterprises and patent citation data. The research results show that: (1) basic research in universities significantly improves the innovation knowledge spillover level of enterprises, as shown by the establishment of technology transfer institutions in universities can significantly promote the patent citation rate and patent output rate of enterprises; (2) the establishment of technology transfer institutions in universities can promote a more complete organization of industry-university-research cooperation, which makes the information asymmetry problem between innovation subjects be solved, thus promoting the innovation knowledge spillover of basic research in universities knowledge spillover effect. Therefore, policy makers should pay more attention to the cultivation of transfer and transformation ability of technology transfer institutions in universities, promote knowledge spillover, provide more preferential policies for university-enterprise cooperation, and shape a good environment for industry-university-research, so as to enhance the innovation ability of cities.