Ambient Assisted Living (AAL) offers possibilities for promising new IT-based health care services that are resulting in new challenges for its design process. We introduce a novel approach for engineering AAL services (AALSDA) which combines methods from service engineering and participatory design. We demonstrate this approach by developing and implementing an electronic data capture system, NuTrack, for self-reporting of nutrition status. The approach uses different concepts for AAL service design and delivery: service engineering for standardizing and structuring service processes, reasonable IT-support for automation of parts of services that need no person-toperson interaction, participatory design to integrate end-users in the development process, and patient integration for personalizing and improving the depth of performance of service providers' service delivery. For illustration, we present the case of chronic disease patients suffering from impaired fine motor skills. Our approach is applied in a pilot study with prototypes tested in focus groups and workshops with patients, caregivers and physicians. The results demonstrate good applicability and feasibility of the concept, and provide new insights for the future design, development and implementation of AAL services.