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Distributed Agile Software Development (DASD) is the most important approach for the modern software industry that allows geographically independent software development. In the past, different tools and frameworks were proposed to solve communication and collaboration issues in DASD but they lacked transparency, trust, traceability, and security. These shortcomings resulted in project failure or overdue, customer dissatisfaction, project deal cancellations, and payment clashes between the customers and development teams. This paper addresses and overcomes the major issues of transparency, trust, security, traceability, coordination, and communication in DASD by embedding blockchain technology. We have proposed a novel blockchain-based framework named as AgilePlus which executes the smart contracts on a private ethereum blockchain for acceptance testing, secure payment, verification of developer’s payment requirements, and automatic payment distribution into the digital wallets of development teams. The execution of these smart contracts automatically assign penalties to the customers for late or non-payments and also to the developers for overdue tasks. Moreover, we have also solved the blockchain’s scalability challenge in AgilePlus by utilizing Interplanetary File System (IPFS) as off-chain storage. Lastly, experimental results prove that the proposed framework enhances transparency, communication, coordination, traceability, security and solves trust issues of both customers and developers in DASD.