Public organizations are increasingly embracing knowledge management (KM) tools and practices. However, there is a lack of understanding and empirical research in the public context to offer relevant insights. This study examines how KM influences public organizations’ performance through the concept of KM capability. KM capability represents an organization’s ability to capture, share, apply, and create knowledge. The salient resources influencing KM capability are identified and their direct and interaction effects are examined. The effect of KM capability on organizational performance is also assessed. Findings from a survey of 101 public organizations indicate that the physical KM resources of KM technology support and non-IT KM investments significantly influence the level of KM capability. Physical KM resources also have stronger effect on KM capability when the organizational KM resource of senior management championship exists. In contrast, the effects of physical KM resources are weakened by centralized and formalized organizational structure. Implications of these findings for KM research and practice in public organizations are discussed.