We redeveloped one of the second-year thermodynamics labs into a Stirling engine design lab. This paper discusses the project components and deliverables of this design-based lab. The five-part project, completed over the course of the semester, challenged students to design and build a functional Stirling engine, guided by specific technical and reflection questions. In addition, the project was designed with the intention to create a stress-free opportunity for students to fail, to ensure that student time-on-task was minimal and meaningful, and to provide meaningful teaching and learning opportunities for graduate teaching assistants. This paper presents student feedback to the design-based lab, and lessons learned from the instructors and facilitators. Overall, this work provides insight into an active learning, design-based approach to a second-year thermodynamics laboratory (Design-implement experience, Standard 5).