Background: Changing population demography and patterns of disease are increasing demands on the health system. Telehealth is seen as providing a mechanism to support community-based care, thus reducing pressure on hospital services and supporting consumer preferences for care in the home. Objective: This study examined the processes involved in developing a prototype telehealth intervention to support palliative care patients involved with a palliative care service living in the community. Methods: The challenges and considerations in developing the palliative care telehealth prototype were reviewed against the Center for eHealth Research (CeHRes) framework, a telehealth development model. The project activities to develop the prototype were specifically mapped against the model's first four phases: Multidisciplinary project management, contextual inquiry, value specification, and design. This project has been developed as part of the Telehealth in the Home: Aged and Palliative Care in South Australia initiative. Results: Significant issues were identified and subsequently addressed during concept and prototype development. The CeHRes approach highlighted the implicit diversity in views and opinions among participants and stakeholders and enabled issues to be considered, resolved, and incorporated during design through continuous engagement. Conclusions: The CeHRes model provided a mechanism that facilitated "better" solutions in the development of the palliative care prototype by addressing the inherent but potentially unrecognized differences in values and beliefs of participants. This collaboration enabled greater interaction and exchange among participants resulting in a more useful and clinically valuable telehealth prototype.