The Government of Malawi has signed contracts called service level agreements (SLAs) with mission health facilities in order to exempt their catchment populations from paying user fees. Government in turn reimburses the facilities for the services that they provide. SLAs started in 2006 with 28 out of 165 mission health facilities and increased to 74 in 2015. Most SLAs cover only maternal, neonatal and in some cases child health services due to limited resources. This study evaluated the effect of user fee exemption on the utilization of maternal health services. The difference-in-differences approach was combined with propensity score matching to evaluate the causal effect of user fee exemption. The gradual uptake of the policy provided a natural experiment with treated and control health facilities. A second control group, patients seeking non-maternal health care at CHAM health facilities with SLAs, was used to check the robustness of the results obtained using the primary control group. Health facility level panel data for 142 mission health facilities from 2003 to 2010 were used. User fee exemption led to a 15% (P < 0.01) increase in the mean proportion of women who made at least one antenatal care (ANC) visit during pregnancy, a 12% (P < 0.05) increase in average ANC visits and an 11% (P < 0.05) increase in the mean proportion of pregnant women who delivered at the facilities. No effects were found for the proportion of pregnant women who made the first ANC visit in the first trimester and the proportion of women who made postpartum care visits. We conclude that user fee exemption is an important policy for increasing maternal health care utilization. For certain maternal services, however, other determinants may be more important.