The main objective of the organization, improving performance and achieve a level of excellence and sustainability in order to maintain the survival, growth, profitability and meet the needs of society. Therefore, the factors effecting on performance has high importance. One of the most important parameters effecting present dynamic environment, is knowledge management. This research measures the impact of knowledge management as the main and independent variable on the performance as the dependent variable and the effect of market orientation and innovation variables as the role of mediator has been investigated too. Data collecting instrument was an adopted questionnaire. The statistical population of the research is composed 265 managers who are active in forge industry in Mashhad.The sample size estimated to be 70. We analyzed data collected by the questionnaire, and SPSS V.21 sotware was used for the data analysis. The results expresses a significant relationship between the variables of knowledge management and performance, and if effect of the mediating role of market orientation and innovation applied, the relationship between knowledge management and performance will be stronger than it used to, also our regression analysis emphasized that market orientation has a stronger role than innovation in this relationship.