This study aims to analyze the implementation of the performance pay system for civil servants in the Ministry of Environment and Forestry (MoEF) in the Republic of Indonesia. This study uses a post-positivist paradigm and analyzes factors that influence the implementation. Data were collected from existing documentation and through in-depth interviews with civil servants in the MoEF. The results of this study indicate that the implementation of the performance pay system in the MoEF has not been effective in supporting the improvement of employee performance. This is due to unavailability of rewards for employees who have successfully achieved their performance targets, ineffectiveness of the application of the performance measurement systems in analyzing actual employee performance, absence of merit pay principles, and the lacking of a review of the implementation of the current performance pay system. Several factors that influence the application of the performance pay system in the MoEF are employee commitment, job evaluation, leadership commitment, performance evaluation, and funding system. The knowledge generated by our research contributes to understanding the empirical condition of performance pay system which will become evident to review the current policy. The findings contribute to improving the cost-effectiveness of the public budget in term of the performance pay system.