As research into customer involvement and Web 2.0 in new service development (NSD) is limited, this study investigated the exploitation and the implications of Web 2.0 for enhancing customer involvement in NSD in tourism. Studies analysing the following fields were reviewed: the concept, the benefits and the risks of as well as the empowering role of Web 2.0 for customer participation in NSD. The review is organized around a framework summarizing the following issues that need to be considered for Web 2.0 exploitation: the drivers, the degree, the management issues and risks, and the benefits of customer involvement. A model measuring the use of Web 2.0 was also developed and used for surveying the level of Web 2.0 exploitation for NSD purposes by Greek tourism firms. The survey findings were also complemented with a qualitative study exploring the perceptions of professionals regarding the benefits, the management issues and risks that they face when exploiting Web 2.0. Finally, the practical and the theoretical implications of the findings are discussed. Copyright © 2012 John Wiley & Sons, Ltd.