We explore the potential for payments for ecosystem services (PES) to reconcile conservation and development goals, using a case study of an experimental PES intervention around the Nyungwe National Park in Rwanda. The scheme involves the purchase of biodiversity conservation services from local communities in four selected locations. Although a portion of the payment is awarded at the household level, it is the collective action of the community that determines the level of the payment. Contracts are negotiated annually and include performance indicators within each participating community. We examine the ability of PES to achieve conservation and development objectives, through three sub-questions: Is the PES scheme effective? Is it legitimate and fair? Is it equitable? Our findings indicate that the relationship between these evaluation criteria is complex, with both trade-offs and synergies. In this case study the effectiveness of PES is dependent on the equitable distribution of the payment, participants’ belief and acceptance of the service being paid for, institutional histories that aid in the establishment of legitimacy and fairness, and the complementary nature of PES to more conventional enforcement methods.