Agile development methods are growing in popularity with a recent survey reporting that more than 80% of organizations now following an agile approach. Agile methods were seen initially as best suited to small, co-located teams developing non-critical systems. The first two constraining characteristics (small and co-located teams) have been addressed as research has emerged describing successful agile adoption involving large teams and distributed contexts. However, the applicability of agile methods for developing safety-critical systems in regulated environments has not yet been demonstrated unequivocally, and very little rigorous research exists in this area. Some of the essential characteristics of agile approaches appear to be incompatible with the constraints imposed by regulated environments. In this study we identify these tension points and illustrate through a detailed case study how an agile approach was implemented successfully in a regulated environment. Among the interesting concepts to emerge from the research are the notions of continuous compliance and living traceability.