How to create competitive advantage through information technology (IT) in the turbulent environment is an important issue to most organizations. This study contributes to the information systems (IS) literatures by help gaining a greater understanding of whether and how IT skills that an IT department possesses influence the firm’s IT capabilities and IT-business alignment. This study proposes a theoretical model to investigate how soft skills and hard skills of the IT department influence a firm’s IT capabilities, and how these IT capabilities in turn affect its IT-business alignment. The study identifies three IT capabilities related to the IS development context: IT-user collaboration, IT adaptability, and IT innovativeness. The empirical data collected from 120 IT directors showed that both soft IT skills and hard IT skills positively affect the three IT capabilities simultaneously, IT adaptability and IT-user collaboration significantly affect the IT-business alignment, and IT-user collaboration has significant effect on IT adaptability. Yet the result failed to support the role of IT innovativeness in facilitating IT-business alignment, nor the effect of IT-user collaboration on IT innovativeness. Our findings confirm the importance of IT-related resources and capabilities possessed by the IT department. The implications and limitations of this study are provided.