Purpose Skin cancer, a significant global health problem, imposes financial and workload burdens on the Dutch healthcare system. Artificial intelligence (AI) for diagnostic augmentation has gained momentum in dermatology, but despite significant research on adoption, acceptance, and implementation, we lack a holistic understanding of why technologies (do not) become embedded in the healthcare system. This study utilizes the concept of legitimacy, omnipresent but underexplored in health technology studies, to examine assumptions guiding the integration of an AI mHealth app for skin lesion cancer risk assessment in the Dutch healthcare system. Methods We conducted a 3-year ethnographic case study, using participant observation, interviews, focus groups, and document analysis to explore app integration within the Dutch healthcare system. Participants included doctors, policymakers, app users, developers, insurers, and researchers. Our analysis focused on moments of legitimacy breakdown, contrasting company narratives and healthcare-based assumptions with practices and affectively-charged experiences of professionals and app users. Results Three major kinds of legitimacy breakdowns impacted the embedding of this app: first, lack of institutional legitimacy led to informal workarounds by the company at the institutional level; second, quantification privilege impacted app influence in interactions with doctors; and third, interactive limits between users and the app contradicted expectations around ease of use and work burden alleviation. Conclusions Our results demonstrate that legitimacy is a useful lens for understanding the embedding of health technology while taking into account institutional complexity. A legitimacy lens is helpful for decision-makers and researchers because it can clarify and anticipate pain points for the integration of AI into healthcare systems.