AbstractNowadays many new product development (NPD) software projects employ agile methodologies. Their basic premise is that a small, colocated team working closely together with the business customer can produce high‐value, high‐quality software efficiently with rapid iterations and frequent feedback. However, in large NPD organizations developing complex products those basic assumptions are not necessarily sufficient, and a more comprehensive view of agility is needed. On the basis of industrial experiences, this article presents a number of pragmatic suggestions about how and when agility could be utilized in large‐scale (embedded) software product development. We propose a framework for understanding the multidimensional nature of agility in such environments for successful software process improvement (SPI), and highlight certain practical considerations. Some industrial case examples are illustrated. We conclude that in large‐scale NPD organizations a holistic systemwide view is needed in order to really be able to take advantage of and improve software development agility. Copyright © 2007 John Wiley & Sons, Ltd.