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Abstract Background National malaria control programmes and international agencies are keen to scale-up the use of effective rapid diagnostic tests (RDTs) for malaria. The high proportion of the Ugandan population seeking care at drug shops makes these outlets attractive as providers of malaria RDTs. However, there is no precedent for blood testing at drug shops and little is known about how such tests might be perceived and used. Understanding use of drug shops by communities in Uganda is essential to inform the design of interventions to introduce RDTs. Methods We conducted a qualitative study, with 10 community focus group discussions, and 18 in-depth interviews with drug shop attendants, health workers and district health officials. The formative study was carried out in Mukono district, central Uganda an area of high malaria endemicity from May-July 2009. Results Drug shops were perceived by the community as important in treating malaria and there was awareness among most drug sellers and the community that not all febrile illnesses were malaria. The idea of introducing RDTs for malaria diagnosis in drug shops was attractive to most respondents. It was anticipated that RDTs would improve access to effective treatment of malaria, offset high costs associated with poor treatment, and avoid irrational drug use. However, communities did express fear that drug shops would overprice RDTs, raising the overall treatment cost for malaria. Other fears included poor adherence to the RDT result, reuse of RDTs leading to infections and fear that RDTs would be used to test for human immune deficiency virus (HIV). All drug shops visited had no record on patient data and referral of cases to health units was noted to be poor. Conclusion These results not only provide useful lessons for implementing the intervention study but have wide implications for scaling up malaria treatment in drug shops.