Many online companies have installed various tools enabling them to provide personalized offerings and unique experiences to individual users based on their personal information. By offering a higher level of personalization with greater accuracy and on a wider range of product or service attributes, the companies are trying to improve their value propositions for their consumers, and accordingly increase profitability. However, linking personalization to profits can be challenging, if the firms do not understand psychological factors and subjective attributions that matter to the users when they consider the adoption of the personalization. For example, recent studies based on behavioral decision making have shown that customers perceive the level of fit between their preferences and personalized offerings differently even when the same personalized offerings are provided, depending on their involvement in the personalization process. Also it has been found that when a customer perceives a higher level of fit for the same personalized offering, she has a higher willingness to pay for the offering. These imply that there is a lack of congruency between the actual level of personalization and users’ perception and valuation of the personalization. Therefore, users’ subjective perception regarding personalization may play a critical role in the adoption of personalization services. To investigate the role of users’ psychological factors in the adoption of personalization, this article theoretically develops a conceptual model of personalization adoption with a focus on two psychological factors, perceived personalization and understanding of personalization. Grounded on SOR (Stimulus-Organism-Response) model and schema theory adapted to the peculiar features of personalization, we formulate six hypotheses describing the underlying mechanism of personalization adoption as follows. First, we identify the mediating role of perceived personalization in the relationship between actual level of personalization and intention to adopt personalization (Hypotheses 1 through 3). According to the SOR paradigm, an external stimulus (S) to the individual is transformed with an internal process (O), and both S and O (or only O sometimes) elicit(s) a response (R). By applying the paradigm into the case of personalization service adoption, the influence of actual level of personalization (S) on intention to adopt the personalization (R) is expected to be mediated by perceived personalization (O). Second, based on the schema theory and the literature on intelligent information systems,we hypothesize that valid and relevant explanation from a personalization system on the process and results of personalization can facilitate the user’s understanding of personalization (Hypothesis 4), which, in turn, can increase the user’s intention to adopt the personalization as well as her perceived personalization (Hypotheses 5 and 6). The proposed model is tested using data gathered from 211 Internet users through an online experiment. Each participant was randomly assigned to one of four recommendation systems on TV, which were generated based on the combination of two manipulation factors: the actual level of personalization (high vs. low) and the provision of explanations on the process and results of recommendation (provided vs. not provided). The two systems with the higher level of personalization recommended three TV models out of sixty-four models to each participant,based on the participant’s responses to eight questions regarding his or her lifestyle. On the other hand, thirty-two TV models and four questions were used for recommendations in the other two systems with the lower level of personalization. Independently of the personalization level, explanation about personalization process and results was provided in the two systems while it was not offered in the remaining two systems. Structural equations modeling using partial least squares validated the proposed model,suggesting the following main results. First, the user’s perceived personalization fully mediates the influence of the actual level of personalization on her intention to adopt personalization. Second, the user’s understanding of the personalization process and its results increases both the perceived personalization and the intention to adopt personalization. Finally, the understanding of personalization can be triggered by proper explanations from a personalization system on its personalization process and the results derived. The results of our study suggest that a personalization service firm should pay attention to users’ psychological factors. The firm need to focus on the perceived personalization of the users rather than the actual level of personalization it provides. Furthermore, it is a desirable strategy for the firm to provide each user with the reason for collecting personal information needed for personalization and the rationale behind the outcome of the personalization process. By doing so, the firm can help the users understand the personalization process and its results, thereby increasing perceived personalization level of the users and ultimately their intentions to adopt personalization.