This study outline design principles for teacher collaboration that can drive educational innovations and inclusion. Employing abductive analysis anchored on constructivist grounded theory, the study examined how the cyclical nature of Lesson Study (LS) can enhance the quality of teachers’ collaboration. The findings illustrate how a student-centered, transdisciplinary, and iterative form of collaboration fostered educational innovations and inclusion. This study further identified that context awareness, integration of support services, and distributed leadership during collaboration facilitated educational innovation and inclusive practices. The cyclical LS process empowered teachers to develop student-centered pedagogies, integrated technology, and adapted physical learning environments to ensure the success of diverse learners. The identified design principles aim to provide more targeted guidance for teacher training and professional development programs by defining the components of teacher collaboration. The findings of this study also offer practical insights for policymakers seeking to develop and support meaningful collaborative practices among teachers that can foster both inclusion and educational innovations.