Modularity is a well-known concept that has been widely applied in both product and service design, respectively, for efficiently creating and offering variety to serve heterogeneous customer demand. However, the application of modularity in the design of a product-service system in which products and services are integrated is less addressed in previous research, despite servitization being a differentiating factor and promising strategy in many manufacturing companies. Thus, the purpose of this paper is to review state-of-the-art research on the development of modular product-service systems. The literature review assesses development methods for modular product-service systems proposed in previous research and categorizes these in regard to the development steps proposed, the research method applied, focus of the product-service systems, and the industry in which the research is conducted. Among others, the literature review concludes that research tends to focus on modular service development in the product-service system and the proposed methodologies for modular product-service system development mainly consists of four generic steps. Based on the findings of the literature review, areas of interest for future research are proposed.