Background Implementing performance-based payment (PBP) plan has led to developing a number of significant potentialities such as performance improvement and effectiveness, quality improvement of provided services, and decline in health system expenditure in hospitals. Despite the fact that PBP plan has a variety of potential advantages, its implementation still may face some challenges. Hence, it seems crucial to identify these barriers and challenges in order to devise some strategies and interventions to pave the way for better implementation of PBP in hospitals. The aim of this proposed protocol is to identify, summarize, and synthesize the existing evidence by undertaking a systematic review to explore the challenges, barriers, and features of implementing PBP in hospitals. Methods and analysis An inclusive search of the literature will be conducted in seven international and national databases including PubMed/MEDLINE, Scopus, Cochrane Library and Web of Science, Magiran, Scientific Information Database (SID), and Barakat knowledge network system (BKNS). The search will be limited to the studies published in English or Persian language. Database search will be supplemented by hand-search of citation, reference lists, and grey literature sources. Based on the pre-established criteria in all steps of the review, two researchers will independently screen all of the retrieved studies. Any discrepancies will be resolved through a discussion between two researchers. In cases where consensus is not reached, it will be referred to a third researcher. The methodological quality of all the included studies will be appraised using the Mixed Methods Appraisal Tool (MMAT). The data will be extracted by means of using a data extraction form, which will be developed and piloted by the research team. The findings will be synthesized through directed content analysis method. Discussion With the growth and development of payment systems all over the world, it is expected that recognizing the challenges of implementing a PBP plan in hospitals will be useful in developing and designing strategies to better implement this plan. Systematic review registration PROSPERO registration number CRD42020152569