Firms engage customers in the firms’ new product development(NPD) process to tap into customers’ needs-related and solution-related knowledge and develop valuable products. Customer participation in NPD has long been believed to improve new product performance. However, prior studies show that the effect of customer participation on new product performance is not always positive. The direction and the magnitude of the effect of customer participation on new product performance may vary depending on the condition under which customer participation occurs. Thus, it is required to examine under what conditions customer participation is more or less effective. To address this, the current study explores how product-specific variables, product individuality and product price positioning moderate the relationship between customer participation and new product market performance. On the basis of the survey data from 188 NPD projects in which end consumers are involved, the results reveal that involving customers in the firm’s NPD process has a significant positive impact on new product market performance. When developing standardized products, customer participation does not improve new product market performance, whereas when developing individualized products, customer participation contributes to enhancing new product market performance. Furthermore, for a high product price positioning versus a low price positioning, customer participation is a much better strategy for improving new product market performance. The findings provide theoretical and managerial implications into how firms can leverage customer participation as a tool to successfully develop new products.