Design and development of an integrated Product-Service System (PSS) aims at replacing stand-alone products or services with a functional offering. However, issues regarding this transition are dissimilar and differentiated. This study discusses the importance of PSSs analysing the theoretical studies accomplished in the extent of their design and development processes. Based on this, a novel procedure, built on the Design Science approach, is proposed, where the distinct models from the literature are merged towards a unified structure serving as a robust and generic methodology for designing PSSs. Each stage of this process is then developed to present a comprehensive design procedure, called the Functional Engineered Product-Service System (FEPSS), which is based on morphological... thinking to conceptualise PSS offerings. A case study illustrates the use of the proposed framework underlining its effectiveness in merging stakeholders' needs, development activities, as well as products and services elements enclosed in the solution.