Performance-based financing (PBF) is assumed to improve health care delivery by motivating health workers to enhance their work performance. However, the exact motivational mechanisms through which PBF is assumed to produce such changes are poorly understood to date. Although PBF is increasingly recognized as a complex health systems intervention, its motivational effect for individual health workers is still often reduced to financial ‘carrots and sticks’ in the literature and discourse. Aiming to contribute to the development of a more comprehensive understanding of the motivational mechanisms, we explored how PBF impacted health worker motivation in the context of the Malawian Results-based Financing for Maternal and Newborn Health (RBF4MNH) Initiative. We conducted in-depth interviews with 41 nurses, medical assistants and clinical officers from primary- and secondary-level health facilities 1 and 2 years after the introduction of RBF4MNH in 2013. Six categories of motivational mechanisms emerged: RBF4MNH motivated health workers to improve their performance (1) by acting as a periodic wake-up call to deficiencies in their day-to-day practice; (2) by providing direction and goals to work towards; (3) by strengthening perceived ability to perform successfully at work and triggering a sense of accomplishment; (4) by instilling feelings of recognition; (5) by altering social dynamics, improving team work towards a common goal, but also introducing social pressure; and (6) by offering a ‘nice to have’ opportunity to earn extra income. However, respondents also perceived weaknesses of the intervention design, implementation-related challenges and contextual constraints that kept RBF4MNH from developing its full motivating potential. Our results underline PBF’s potential to affect health workers’ motivation in ways which go far beyond the direct effects of financial rewards to individuals. We strongly recommend considering all motivational mechanisms more explicitly in future PBF design to fully exploit the approach’s capacity for enhancing health worker performance.