This paper summarizes the latest progress in the ITER blanket system design as it proceeds through its final design phase with the Final Design Review planned for Spring 2013. The blanket design is constrained by demanding and sometime conflicting design and interface requirements from the plasma and systems such as the vacuum vessel, in-vessel coils and blanket manifolds. This represents a major design challenge, which is highlighted in this paper with examples of design solutions to accommodate some of the key interface and integration requirements.