In this paper, we examine the effects on innovation of the dual embeddedness of returnee young ventures in both domestic and international networks of relationships and knowledge contexts. Based on a framework combining a business relationship perspective and the knowledge-based view, we propose that returnee young ventures take advantage of business relationships and opportunity knowledge from both international and domestic markets to nurture their innovation. We test our model on a sample of 200 returnee young ventures in China. The findings reveal that business relationships are essential for knowledge about technological and business opportunities in both international and domestic markets, although only international opportunity knowledge and domestic business relationships positively influence new product development. Besides, the interaction between international and domestic business relationships constrains firms' capacity for obtaining international opportunity knowledge. Our study offers insights into how the trade-offs between dual relationships and subsequently sourced knowledge contribute to new product development in emerging markets, and extend the discussion on the paradox view of business relationships with geographically dispersed actors.