Background: Assessment of policies and determining their challenges are necessary to improve and reform health systems. Family physician and rural insurance policies have been the second important phase of changes in health services provided in Iranian villages and towns with populations under 20,000. This study aimed to identify the challenges of implementing these policies in Kerman Province, Iran. Methods: This qualitative study was carried out in 2010 through semi-structured focus group discussions and document reviews. Purposive sampling was used to select 10 policy executives from Kerman University of Medical Sciences and Medical Insurance Organization and family physicians. Data from the focus groups and document reviews was analyzed by content analysis. Results: The challenges were categorized into seven main groups including improper motivation initiatives, inadequate educational effectiveness, poor comprehensiveness in instructions and arrangements, deficient per capita resources, low efficacy of health information management systems, lack of a suitable referral chain, and inadequate cultural infrastructure. Conclusion: The success of every policy depends on periodical assessments of its implementation challenges. Considering the expansion of family physician policy in larger urban areas, more attention should be paid by the national and local authorities to eliminate the identified barriers and constraints.