Background: The public-private partnership in the health sector, which was introduced to improve the delivery of health services, has existed for decades in Tanzania. Contrary, the anticipated outcomes have not been realised. This paper attempts to underscore the challenges that have permeated the provision of health services under public-private partnerships. Methods: A qualitative case study design was used. Institutional arrangements under public-private partnerships in the delivery of health services was used as a case. Fifteen (n=15) in-depth interviews were conducted with participants from both the public and private sector. Relevant documents were also reviewed to inform this study. Results: Findings revealed that, although public-private partnerships is hailed for supplementing government’s efforts in the provision of health services, institutional arrangements for the smooth provision of these services is lacking. Several challenges including inadequate resources, ineffective monitoring and evaluation of public-private partnerships performance, insufficient consultations between partners as well as varying goals and strategies were noted. Conclusion: Challenges facing institutional arrangements for public-private partnerships may either be influenced by inadequate legal and policy framework as well as ineffective implementation practices. Therefore, effective and smooth interface can be achieved by strengthening implementation practices through development of strong and adequate supportive policy framework that can ensure adherence to contractual agreements.