Setting priorities for health services is a complex and value laden process. Over the past twenty years, there has been considerable scholarly attention paid to strengthening fairness and legitimacy using the prominent ethical framework, Accountability for Reasonableness (A4R). A variety of case studies applying A4R have advanced our conceptual understanding of procedural fairness, and have highlighted the significance of context through its application. There is a paucity of research, however, that rigorously examines how and to what extent context influences health priority setting processes and the establishment of procedural fairness. We argue here that to study context rigorously requires taking a holistic view of the system by examining the dynamics and interrelationships within it. Using the Transformative Systems Change Framework (TSCF), this investigation sought to examine the influence of system factors on priority setting practice and procedural fairness. A qualitative case study of Ethiopian district health planning was undertaken in 2010 and 2011. Methods included 58 qualitative interviews with decision makers, participant observation, and document analysis. Data analysis followed in three phases: i) an inductive analysis of district health priority setting to highlight experiences across each of the three districts selected, ii) deductive analysis applying A4R and the TSCF independently; and iii) a synthesis of concepts of priority setting practice and procedural fairness within a broader, theoretical understanding of the system. Through the application of the TSCF, a nuanced understanding of priority setting practice is revealed that situates this process within a system of interdependent components that include: norms, operations, regulations, and resources. This paper offers a practical guide attuned to system features influencing the design, implementation, and sustainability of greater fairness in health priority setting practice.