Embedding digital innovation into existing organizational structures poses a critical challenge to many established companies across all industries. One option that has drawn increased attention lately is the implementation of dedicated digital innovation units. However, it is yet unclear, how these units are designed to fit their specific objectives. Therefore, we develop a typology for these digital innovation units, identifying different types based on the objectives and respective design option patterns of these units. To do this, we follow a qualitative-empirical research approach, covering 23 real world instances of digital innovation units. We employ the loose-tight-coupling perspective as a theoretical lens to interpret and classify the observed design choices. We contribute to literature by identifying three ideal types of digital innovation units and provide insights for practitioners on how to set up this specific type of organizational units.