Project finance is a financing arrangement for projects, and it is characterised by the creation of a legally independent project company financed with non- or limited recourse loans. It is observed that the popularity of project finance is increasing in the recent decades, despite of the impact of Asian financial crisis. Especially in emerging markets, project finance is very common among the public-private partnership projects. It is possible that project finance yields some benefits in project management that other forms of funding are not able to provide. This research aims to explore the impacts of project finance on the risk management of projects, as well as the mechanisms of the effects of various factors on project risk management. The research starts with a quantitative analysis which consists of project data from 32 projects in recent years. The regression analysis on these quantitative data reveals that factors such as the separation of legal entity and existence of third-party guarantees can effectively reduce the borrowing rates of the projects. The borrowing rates, expressed in terms of credit spreads over LIBOR, are regarded as a proxy for the overall risk level of the projects. The qualitative section which involves five structured interviews further explores the relationships of the attributes of project finance on project risk management. The interviewees largely agrees on the effects of the separation of legal entity, non- or limited recourse loans, and the existence of third-party guarantees in managing political and country risks, business risks, and principal-agency risks. The involvement of a larger number of stakeholders in the projects enable the project to enhance its risk management ability by gaining external expertise and knowledge, influences on government policies, and more importantly, closer supervisions on project activities. Apart from revealing the important features of project finance, and the potential benefits it may yield on project risk management, the effectiveness of these features are also discussed. The study also examines the relationships between these features and the common risk factors which may affect all projects. Some recommendations to enhance the benefits of project finance and reduce the associated transaction costs are made based on this study.