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We introduce an effective and efficient iterative algorithm for solving the continuous-time service network design problem. The algorithm achieves its efficiency by carefully and dynamically refining partially time-expanded network models so that only a small number of small integer programs, defined over these networks, need to be solved. An extensive computational study shows that the algorithm performs well in practice, often using time-expanded network models with size much less than 1% (in terms of number of variables and constraints) of a full time-expanded network model. The algorithm is inspired by and has many similarities to the dynamic discretization discovery algorithm introduced in Boland et al. [Boland N, Hewitt M, Marshall L, Savelsbergh M (2017) The continuous-time service network design problem. Oper. Res. 65(5):1303–1321.], but generates smaller partially time-expanded models, produces high-quality solutions more quickly, and converges more quickly.