Background: The number of older people with unmet health care and support needs is increasing substantially due to the challenges facing health care systems worldwide. There are potentially great benefits to using the Internet of Things coupled with artificial intelligence to support independent living and the measurement of health risks, thus improving quality of life for the older adult population. Taking a co-design approach has the potential to ensure that these technological solutions are developed to address specific user needs and requirements. Objective: The aim of this study was to investigate stakeholders’ perceptions of independent living and technology solutions, identify stakeholders’ suggestions on how technology could assist older adults to live independently, and explore the acceptability and usefulness of a prototype Internet of Things solution called the NEX system to support independent living for an older adult population. Methods: The development of the NEX system was carried out in 3 key phases with a strong focus on diverse stakeholder involvement. The initial predesign exploratory phase recruited 17 stakeholders, including older adults and family caregivers, using fictitious personas and scenarios to explore initial perceptions of independent living and technology solutions. The subsequent co-design and testing phase expanded this to include a comprehensive web-based survey completed by 380 stakeholders, encompassing older adults, family caregivers, health care professionals, and home care support staff. This phase also included prototype testing at home by 7 older adults to assess technology needs, requirements, and the initial acceptability of the system. Finally, in the postdesign phase, workshops were held between academic and industry partners to analyze data collected from the earlier stages and to discuss recommendations for the future development of the system. Results: The predesign phase revealed 3 broad themes: loneliness and technology, aging and technology, and adopting and using technology. The co-design phase highlighted key areas where technology could assist older adults to live independently: home security, falls and loneliness, remote monitoring by family members, and communication with clients. Prototype testing revealed that the acceptability aspects of the prototype varied across technology types. Ambient sensors and voice-activated assistants were described as the most acceptable technology by participants. Last, the postdesign analysis process highlighted that ambient sensors have the potential for automatic detection of activities of daily living, resulting in key recommendations for future developments and deployments in this area. Conclusions: This study demonstrates the significance of incorporating diverse stakeholder perspectives in developing solutions that support independent living. Additionally, it emphasizes the advantages of prototype testing in home environments, offering crucial insights into the real-world experiences of users interacting with technological solutions.