Since the late 1980s, many countries in Africa have been granting increased autonomy to their main teaching hospitals. This policy has significant international support but has been evaluated little from either theoretical or empirical perspectives. This paper attempts to fill this gap by assembling evidence from policy documents, theoretical debates and empirical evidence of related policy changes in other contexts such as the development of trust hospitals in the UK NHS. The paper attempts to locate the policy in the broader context of the package of health sector reform measures proposed at international level, and to identify the role it is intended to play in the achievement of the implicit objectives of that package. The objectives identified are improvements in allocative efficiency and equity, improvements in internal efficiency and improvements in responsiveness, accountability and choice. Each of these objectives presents difficulties which suggest that only modest short-term expectations of the policy can be justified. Given the lack of evidence from existing experience, a research agenda is suggested, which aims to provide information to guide further implementation of the policy.