Chumbe Island Coral Park (CHICOP), established in 1991 and possibly the first fully functioning MPA in Tanzania, provides an illustration of issues that arise with the installation of a privately created and managed protected area. Challenges caused by the legal and institutional environment for private investment in conservation resulted in much higher costs than originally anticipated. The management experiences of CHICOP, its problems and achievements in the legal and institutional environment of Zanzibar are described, and lessons learned are summarised. Management costs of the privately established and managed park are only a fraction of what is normally needed for donor-funded projects through government agencies. Particularly, the training of local fishermen as park rangers by volunteers proved to be cost effective and crucial to the success of the MPA, and is presented as an example of direct partnership with stakeholders. Out of necessity, cost control and income-generating activities are more developed and successful, thus creating much better prospects of sustainability. Risks for private investors remain high due to the generally unfavourable investment climate, the volatile tourism market and the lack of long-term security of tenure. Because of these risks, and the more noticeable conservation impact on the ground, a case is made for more donor support to direct resource users from both the informal and formal private sectors, including to privately managed MPAs.