This study introduces a new and parsimonious classification of supervisor monitoring (observational monitoring and interactional monitoring) and examines the effects of these two monitoring styles on subordinate innovation. Guided by social exchange theory, we propose that the two monitoring styles influence subordinate job attitudes (trust and distrust in their supervisor), relationship quality (leader–member exchange), and work behaviors (feedback‐seeking behaviors), which, in turn, affect their innovation. The pilot study developed the scales for the two monitoring styles and tested their content validity among 189 undergraduate students. Using a sample of 385 subordinates, Study 1 assessed the construct validity of the two monitoring styles. In Study 2, the results of a survey of 388 supervisor–subordinate dyads show support for the proposed theoretical model. Specifically, observational monitoring and interactional monitoring were related to subordinates' trust and distrust in their supervisor. Trust and distrust in the supervisor, in turn, were related to the quality of the leader–member exchange, feedback‐seeking behaviors, and ultimately, supervisor‐rated innovation. These findings suggest that supervisors' monitoring styles have both positive and negative effects on their subordinates' innovation, which depends on the type of monitoring supervisors engage in. Copyright © 2015 John Wiley & Sons, Ltd.