Transactive energy systems (TESs) combine both economical and control mechanisms, and have become promising solutions to integrate distributed energy resources (DERs) in modern power systems. This article will introduce the basic concept of a TES, including its definition, process, time scale, and benefits. The configuration of the TES is then described in detail from the perspectives of the physical system, information system, transaction system, and regulatory system. The transaction mechanism allows participants (e.g., customer, generator, transmission operator, marketer, etc.) to conduct various transactions with any other party to the extent that regulatory policy permits. Transactive control is regarded as one of the most advanced approaches to realize the full response potential of flexible devices and respect the end user’s privacy, preference, and free will. Finally, some challenges to the development of TESs that arise from the limitations of current equipment level and methodological concepts will be discussed. In summary, TESs provide a more efficient, fair, and transparent environment for participants to promote DERs utilization, improve market efficiency, and increase economic benefits.