OBJECTIVES: To assess the perceptions of health workers towards the drug revolving fund (DRF) scheme and the perceptions of the community members about health workers since the introduction of the DRF. METHODS: The study was conducted in four purposively selected local government areas (LGAs) in southeast Nigeria where the Bamako initiative DRF was operational. Data was collected using in-depth interviews with randomly selected health workers and exit interviews with patients who attended the health centers. RESULTS: There were differences between the ways the DRF affected health workers in the different LGAs. In general, the motivation of the health workers to deliver health services improved significantly largely because they had basic drugs to work with and they benefited from the drug gains accruing through the operations of the DRF. However, as time went on, some got de-motivated and their attentions became more focused on revenue generation and profit making through sale of own drugs at the expense of health of the people as no incentives were paid and salaries were delayed. Curative services were provided more than promotive and preventive services and drugs are prescribed irrationally. Patients showed wide spread dissatisfaction with fees charged, waiting time before being seen, and treatment instructions given to them. CONCLUSION: Governments need to focus not only on the provision of drugs and revenue generation but also on providing strong support for in-service training, monitoring and supervisory activities to improve health workers' attitude to work. The governments also need to explore incentives such as working condition and monetary incentives to motivate health workers to improve their performance so as to serve the consumers better.