Community-based conservation interventions can only be successful in the long term if their aims and activities are accepted by local people. A key determinant of acceptability is the perceived fairness of the distribution of the costs and benefits of the intervention. We examined the opportunities and challenges posed by benefit distribution in community-based Payment for Environmental Services (PES) interventions through a case study from Menabe, Madagascar. The intervention appears to be an overall success, with individuals reporting high levels of perceived fairness of payment distribution and a high proportion of individuals expressing overall net benefit. Nevertheless, a lack of adequate benefits accruing to those individuals facing high agricultural opportunity costs and evidence of sub-groups in the community reaping excessive benefits was noted across communities, and instances of poor governance were observed as a barrier to success in some communities. We present solutions to address these key challenges in the design and implementation of community-based PES interventions.