Product design has a major, often under-estimated impact on sustainability. This article describes the process of a new sustainable product design aiming for integrating circular engineering and social aspects as an integral part of the design process. A methodology is presented that enables a holistic, systematic approach to product development with the product design goal of a ‘Circular System’ with three subordinates but interdependent key elements: the ‘Product’, its ‘Life Cycle System’ and the related ‘Context System’. Social and ecological responsibility is integrated into product design from the beginning, ending up in a cyclic ‘Convergent Creation Model’. The associated methodology can be understood as a valuable opportunity to structure and control the complexity of sustainable product design for circularity. Two representative use cases - an established high-volume circular product (smart water metering unit) and a strategic design and R&D perspective on “green” robots, contributing as sustainably engineered production systems to zero emission production – are discussed. Both demonstrators for the general applicability of the proposed ‘Circular System Design’ approach underline the potential of the methodology for advanced sustainable systems engineering in different phases of product design and circular production.