Entrepreneurial alertness has been identified as a major factor in the process of opportunity recognition, but the components of alertness and the relationships between this and other factors are still ambiguous. Furthermore, limited empirical testing exists to validate the alertness construct (Mitchell et al., 2007; Tang, 2008). We attempt to reveal the critical role of alertness in the opportunity recognition process. This study defines entrepreneurial alertness as a kind of cognitive ability for perceiving and interpreting market information (Gaglio & Katz, 2001). We investigate the different types of prior knowledge (ways to serve markets, customer problems, markets, technology (Shane, 2000; Marvel & Lumpkin, 2007) and social sources of information (mentors, informal industry networks, participation in professional forums) (Ozgen & Baron, 2007) that are associated with entrepreneurial alertness (perception and interpretation ability) (Kirzner, 1979; Gaglio & Katz, 2001). Our findings suggest that entrepreneurial alertness is linked to the innovativeness of the opportunities recognized.