The integration of Artificial Intelligence (AI) in service provision has prompted a revaluation of how we design service encounters, given the emergent role this technology plays in services. This article introduces the concept of the Hybrid Service Encounter to explore the evolving interplay between humans and AI in service contexts. We propose a 2 × 2 framework that categorizes service interactions into four distinct quadrants based on whether the provider and user are human or AI. Drawing on service design literature and current developments in AI, we analyze the implications of these hybrid encounters for service design roles, processes, and outputs. The article further identifies key areas for future research to guide the development of human-centered and ethical AI-powered services. Our contribution extends service design theory and practice by offering a framework to guide the integration of AI in service encounters.