This paper conceptually introduces VF-KDO (Virtual Factories with Knowledge-Driven Optimization, a research profile of the University of Skövde, Sweden, which is underway from 2018-2026. The goal of this research profile is to deliver radical innovations in manufacturing research essential to the design and operation of next-generation manufacturing systems. A unique concept proposed in VF-KDO is: knowledge extracted for decision support is achieved through systematically exploring, e.g., using advanced, interactive data analytics techniques on optimal solutions generated via many-objective optimizations on virtual factory models. As the word “driven” means “motivated” or “manipulated”, so does KDO have some two-fold meanings: (1) optimizations that aim at generating knowledge, not only mathematically optimal solutions; (2) knowledge-controlled optimizations, instead of some blind/black-box processes. It is this concept of KDO, combining with modular, virtual factory models at different levels, which distinguishes VF-KDO from other related research efforts found internationally and in Sweden. The cutting-edge research topics involved in the research profile and their synergy with the digitalization efforts of the 7 partner companies, in form of the development of an intelligent decision support system, can be used to improve the competiveness of the Swedish manufacturing industry by supporting their holistic, optimal and sustainable decision making.