The International Space Station (ISS) and future spacecraft habitats are limited by space and weight, particularly during rocket launch and during long-term missions. Onboard systems should be designed to be compact, multifunctional, and highly efficient. The current capabilities of the ISS’s lighting system are limited. The systems are constrained, fixed, difficult to repair, and features are limited. This technology can also impact astronauts’ health, for instance their sleeping schedule. Disruption of the circadian rhythm leads to a decrease in cognitive function, reduced work efficiency, and overall astronaut health. In this project, we developed a versatile, modular reconfigurable lighting system (MRLS) that addresses the challenges of compactness, adaptability, and thermal dissipation. The MRLS features an arrangement of LEDs (i.e., warm (4000K) and cool (6000K)), with three different lighting options, optimized optics, beam control, and a diffuser. Since conduction and convection cannot dissipate heat in space, a liquid cooling system was implemented to ensure proper thermal regulation and maintain performance. Additional features of the system include different mounting options, battery-powered operation, and selectable color temperatures for circadian rhythm support. The resulting modular system proved to be versatile, task-adaptable, and efficient in thermal management.