Payments for ecosystem services (PES) is a trending topic in environmental resource management. The literature on PES has been growing almost exponentially, and practical applications of PES schemes are mushrooming all around the world. In this review article, I present the existing definitions of PES, the factors to consider during the design and implementation stages of PES programs, as well as discuss the recent theoretical debates related to PES in the literature—specifically those related to commodification and legitimacy of PES, its behavioral implications as well as the issues of power and equity. Despite a wealth of accumulated knowledge in the theoretical and experimental fields related to PES, there is still a considerable lack of empirical studies assessing the practical implementation of PES in the field. Only a few schemes are actually systematically assessed, and there is still a lack of a unified comprehensive framework for the thorough evaluation of existing practical experiences. I outline some of the future research challenges that need to be tackled in order to gain a better understanding of the opportunities that the PES mechanism offers to environmental policy makers and other interested stakeholders.