Technological core competence is a set of knowledge essentially, and knowledge is the dominant resource and production factor in enterprises, which is closely related to the growth of them. By analyzing the connotation, characteristics of technological core competence, and its relationship with knowledge, the paper explains the function of knowledge transformation to the formation of technological core competence. It argues that the key of management of such a competence lies in the effective application, management and innovation of knowledge, and establishing the management pattern of technological core competence from the macroscopic point of view, fostering effective learning mechanism to upgrade the competence by knowledge innovation.