Abstract: The innovation activities of Yu Le Bao exemplify the role of legal wisdom in Internet finance innovation. Yu Le Bao is an internet entertainment funding platform initiated by Alibaba. During the creation and development of Yu Le Bao, legal concerns are taken into consideration at all steps. The design of Yu Le Bao displays legal wisdom of the innovation team. The legal ability of market entities are classified into four levels:legal awareness, legal knowledge, legal sense, and legal wisdom. Finance innovations often go beyond the existing laws and regulations, therefore facing lots of legal barriers. Legal wisdom becomes an indispensible weapon for the market players conducting internet finance innovation. In the process of legalization of internet finance, the essence of legal wisdom is not regulatory arbitrage or evasion of law, but is reflected in designing foresighted legal structure for transaction, embracing financial supervision as well as accelerating the development of rules.