The purpose of this research is to examine the role of institutional quality on the knowledge economy in a group of leading economies for the period 1996-2024 using the panel data approach and the PCA. Six countries have been considered in this study, which include Sweden, Switzerland, Denmark, USA, UK, and Norway. A knowledge economy index has been created using five variables namely secondary education, higher education, patents, internet users, and mobile phone users while institutional index has been formed using six variables including governance indicators along with income, foreign direct investments, and trade openness. From the empirical results of the model, it is found that the value of R² of the model is 0.6441 indicating that the model is statistically significant. From the results, it is revealed that there is a positive relationship between institutional quality and the knowledge economy (β = 0.136). Out of all the factors, the role of trade openness is found to be more important (β = 1.578) than income (β = 0.746) while the role of foreign investment is quite insignificant (β = 0.016).