Digital services represent a business approach employed by organizations to operate in the digital environment. However, systematic development guidelines for developing quality digital service systems are lacking in the literature. The authors identified four general challenges for developing and implementing customer-engaging digital service systems (CEDSS). By employing the method of canonical action research in a digital service system project, they derived 10 design principles for developing high-quality CEDSS. They empirically evaluated the design principles in the development project and through follow-up focus group sessions. The design principles provide applicable and actionable guidelines for the development of CEDSS.