Beginning the early 1990s, many countries globally adopted the third-generation health sector reforms with a focus of strengthening the primary health care system through community participation. On the contrary, three decades later, primary health care systems in many Low- and Middle-Income countries (LMICs) including Tanzania have remained weak. Specifically, priority setting for the vulnerable groups including the elderly have been weak. We aimed to analyse the prospects and challenges of the priority setting process for the elderly health care services following the 1990s health sector reforms in Tanzania. We conducted an exploratory case study on priority setting process for the elderly healthcare services in Igunga and Nzega Tanzania. We carried out 24 Key Informant Interviews (KIIs) with the positions of District medical officers, social welfare, Medical Officers in-charge (MOI), planning officers and health system information focal person. Additionally, we carried out two focus group discussions (FGDs), one from each district with six participants from each group. Participants for the FGDs were MOI, health secretary, representative members of Health Facility Governing Committee (HFGC) and Council Health Management Team (CHMT). Data were analyzed using the qualitative content analysis. Two categories emerged from the analysis of the transcripts. These were the prospects and challenges in priority setting for the elderly population under the decentralized health sector in rural Tanzania. The prospects included; the capacity of the LGAs on priority setting; existence of strategies used by LGAs; availability of teamwork spirit and the existence of guidelines for priority setting at LGAs. The challenges included difficulties of elderly identification, insufficient resources to implement the planned activities at the LGAs, unintegrated digitalized government health information tools or programs at the LGAs, interference of LGAs by the Central Government and low interest of stakeholders on elderly health care. This study highlights the prospects and challenges facing priority setting for elderly care at the centralized health system in rural Tanzania. From the results the process is well organized but faces some challenges which if not addressed jeopardized and has potential to continue affecting the priority setting. Addressing the challenges highlighted requires joint efforts from both the elderly population in the community, healthcare providers and decision makers across all levels of the health system. This study serves as an eye-opener and calls for a bigger study to get a comprehensive picture of priority setting of the elderly health care in Tanzania.