This study examines the transformative role of co-production in delivering public goods and services across diverse public-service contexts. It aims to examine the nature, application, drivers, barriers, and reported outcomes of co-production. A systematic literature review with thematic synthesis was conducted using 10 peer-reviewed studies selected through predetermined eligibility criteria. The findings identified stakeholder engagement, knowledge integration, resource availability, and motivational drivers as recurring factors associated with effective co-production. The reviewed evidence indicates that co-production can facilitate citizen participation, knowledge exchange, service improvement, learning, and responsiveness to public needs. However, implementation can be constrained by unequal participation, power imbalances, limited financial and institutional resources, technological barriers, weak trust, and difficulties in consistently measuring outcomes. Based on the synthesis, the study develops the Integrated Co-Production Impact (ICI) Theory, which proposes that motivational drivers promote stakeholder engagement, engagement facilitates knowledge integration, and resource availability enables integrated knowledge to contribute to co-production effectiveness. The study concludes that effective co-production depends on the interaction of these conditions and recommends inclusive participation, adequate resources, institutional support, and stronger evaluation mechanisms to enhance sustainable public-service outcomes.