Advances in understanding how habit forms can help people change their behaviour in ways that make them happier and healthier. Making behaviour habitual, such that people automatically act in associated contexts due to learned context-response associations, offers a mechanism for maintaining new, desirable behaviours even when conscious motivation wanes. This has prompted interest in understanding how habit forms in the real world. To reliably inform intervention design, habit formation studies must be conceptually and methodologically sound. This paper proposes methodological criteria for studies tracking real-world habit formation, or potential moderators of the effect of repetition on formation. A narrative review of habit theory was undertaken to extract essential and desirable criteria for modelling how habit forms in naturalistic settings, and factors that influence the relationship between repetition and formation. Next, a methodological review identified exemplary real-world habit formation studies according to these criteria. Fourteen methodological criteria, capturing study design (four criteria), measurement (six criteria), and analysis and interpretation (four criteria), were derived from the narrative review. Five extant studies were found to meet our criteria. Adherence to these criteria should increase the likelihood that studies will offer revealing conclusions about how habits develop in real-world settings.