Drawing on 17 months of ethnographic fieldwork (2007–2011), this article critically examines the consequences of two global health initiatives (GHIs), the Global Fund and the Gates Foundation, on NGOs engaged in HIV/AIDS prevention and treatment among gay men in northwest China. I argue that a short‐term surge in funding provided by GHIs between 2008 and 2010 exacerbated preexisting conflicts between NGOs by promoting a neoliberal process in which the state outsourced public health services to civil society organizations, deliberately encouraging a climate of competition among NGOs. I also show how GHIs encouraged the bureaucratization and medicalization of one grassroots gay NGO, channeling its activities away from broader political and social objectives and compelling the group to develop a narrower and more entrepreneurial emphasis on HIV testing and treatment. This article contributes to a deeper ethnographic understanding of the complex and perhaps unintended consequences of GHIs.