OBJECTIVES To determine the key organizational dimensions that influence the autonomy of public hospitals and the level of granted autonomy in each dimension. In next step we recommended the most effective degree and policy for granting autonomy to Iranian public hospital. METHODS Six public hospitals affiliated with MOH were randomly selected. In this qualitative study, we interviewed 27 hospital managers (response rate of 82%). The semi-structured interview guide was developed based on the results of four initial in-depth interviews and the organizational reform model of the World Bank. We used the framework method for the analysis of qualitative data. RESULTS Nine themes were identified as the key factors influencing hospital autonomy: decision right in strategic management, human resources management, financial management and physical resources management, product and procurement market exposure, financial residual claim, governance arrangements and accountability , and social functions. Limited decision rights in strategic, human resources, and physical resources management were granted to hospitals. Hospitals were not the financial residual claimant, but were exposed to competitive product market. Autonomy was limited regarding the procurement market. Governance systems were hierarchical and accountability mechanisms were supervisor-supervisee oriented. Some of the hospitals social functions were defined, but the expenses of these functions were not totally reimbursed by the government and the insurance industry. CONCLUSIONS The autonomy granted to the hospitals is unbalanced and paradoxical. More decision rights should be granted for management of strategic, human resources and physical resources as well as hospitals entry to the procurement market. Hospitals need to be the financial residual claimant. The hierarchical administrative systems should be transformed to cooperative ones. Instead of supervisor-supervisee oriented control measures, Ministry of Health and Medical Education needs more regulatory mechanisms for controlling hospitals' performance and social functions