Aim/Background To describe the two‐stage prioritization process being used by the UK National Institute for Health Research's Collaboration for Leadership in Applied Health Research and Care for the South‐West Peninsula (or PenCLAHRC) – a joint health service and university partnership and reflect on implications for the wider context of priority setting in health‐care research. Method PenCLAHRC's process establishes the priorities of Stakeholders including service users across a regional health system for locally relevant health services research and implementation. Health research questions are collected from clinicians, academics and service users in Devon and Cornwall (UK) using a web‐based question formulation tool. There is a two‐stage prioritization process which uses explicit criteria and a wide Stakeholder group, including service users to identify important research questions relevant to the south‐west peninsula locality. Results To date, a wide variety of health research topics have been prioritized by the PenCLAHRC Stakeholders. The research agenda reflects the interests of academics, clinicians and service users in the local area. Potential challenges to implementation of the process include time constraints, variable quality of questions (including the language of research) and initiating and maintaining engagement in the process. Shared prioritization of local health research needs can be achieved between Stakeholders from a wide range of perspectives. Conclusions The processes developed have been successful and, with minor changes, will continue to be used during subsequent rounds of prioritization. Engagement of Stakeholders in establishing a research agenda encourages the most relevant health questions to be asked and may improve implementation of research findings and take up by service users.