This paper analyzes the knowledge sharing process that characterizes Product Service Systems (PSS) design, drawing on data from an in-depth study in the Swedish manufacturing industry. It categorizes and describes the most relevant knowledge sharing barriers affecting early PSS development phases, discussing them in terms of capabilities to be included in a knowledge engineering system to fulfil the increasing need for knowledge in product-service design. To cope with these barriers, the authors introduce the concept of Engineering 2.0, which borrows the general Web 2.0 concept and translates it into engineering terms, going into the details of how functional product development may benefit from the possibility to integrate bottom-up and "lightweight" knowledge sharing techniques with traditional PLM/PDM/CAD solutions, and highlighting the most relevant challenges for the Engineering 2.0 research.