Abstract: This study was conducted in two wards of Chato district namely; Chato and Buseresere wards. A cross sectional community survey was conducted in these two wards aiming at assessing the challenges on the performance of Community Health Fund (CHF) and peoples’ perception on health care services provided by the scheme. The specific objectives were to assess the execution of CHF in the study area, to identify the current enrolment rate and enrolment trend, and to assess the perception of the community on the scheme. The study employed 190 respondents including members and non-members of CHF as well as key informants. The sample was selected by simple random sampling and purposive methods. It was found that, the performance of the scheme in the study area was very poor, enrolment rate was very low and the new enrolment trend was declining. While lack of knowledge of CHF was noted to be one of the main sources of low enrolment, quality of services was very poor and the premium was unaffordable to the majority except for few people. Basing on such result it is recommended that, Effective sensitisation should be carried out and CHF services should be extended to private hospitals. Evaluation of the program should be carried out regularly and there should be specific doctors for members of CHF. This is to say, if quality of services is to improve; and through seminars about CHF targeting people’s sensitisation, monitoring and evaluation of the scheme should be regularly done by both the government by involving the beneficiaries