BACKGROUND: Similar to other countries in the region, South Africa is currently reorienting a loosely structured and highly diverse community care system that evolved around HIV and TB, into a formalized, comprehensive and integrated primary health care outreach programme, based on community health workers (CHWs). While the difficulties of establishing national CHW programmes are well described, the reshaping of disease specific and care oriented community services, based outside the formal health system, poses particular challenges. This paper is an in-depth case study of the challenges of implementing reforms to community based services (CBS) in one province of South Africa. METHODS: A multi-method situation appraisal of CBS in the Western Cape Province was conducted over eight months in close collaboration with provincial stakeholders. The appraisal mapped the roles and service delivery, human resource, financing and governance arrangements of an extensive non-governmental organisation (NGO) contracted and CHW based service delivery infrastructure that emerged over 15-20 years in this province. It also gathered the perspectives of a wide range of actors - including communities, users, NGOs, PHC providers and managers - on the current state and future visions of CBS. RESULTS: While there was wide support for new approaches to CBS, there are a number of challenges to achieving this. Although largely government funded, the community based delivery platform remains marginal to the formal public primary health care (PHC) and district health systems. CHW roles evolved from a system of home based care and are limited in scope. There is a high turnover of cadres, and support systems (supervision, monitoring, financing, training), coordination between CHWs, NGOs and PHC facilities, and sub-district capacity for planning and management of CBS are all poorly developed. CONCLUSIONS: Reorienting community based services that have their origins in care responses to HIV and TB presents an inter-related set of resource mobilisation, system design and governance challenges. These include not only formalising community based teams themselves, but also the forging of new roles, relationships and mind-sets within the primary health care system, and creating greater capacity for contracting and engaging a plural set of actors - government, NGO and community - at district and sub-district level.