Background The Millennium Development Goals call for a 75% reduction in maternal mortality between 1990 and 2015. Skilled birth attendance and emergency obstetric care, including Caesarean section, are two of the most important interventions to reduce maternal mortality. Although international pressure is rising to increase donor assistance for essential health services in developing countries, we know less about whether government or the private sector is more effective at financing these essential services in developing countries. Methods We conducted a cross-national analysis to determine the association between government versus private financing of health services and utilization of antenatal care, skilled birth attendants and Caesarean section in 42 low-income and lower-middle-income countries. We controlled for possible confounding effects of total per capita health spending and female literacy. Findings In multivariable analysis, adjusting for confounders, government health expenditure as a percentage of total health expenditure is significantly associated with utilization of skilled birth attendants (P = 0.05) and Caesarean section (P = 0.01) but not antenatal care. Total health expenditure is also significantly associated with utilization of skilled birth attendants (P < 0.01) and Caesarean section (P < 0.01). Discussion Greater government participation in health financing and higher levels of health spending are associated with increased utilization of two maternal health services: skilled birth attendants and Caesarean section. While government financing is associated with better access to some essential maternal health services, greater absolute levels of health spending will be required if developing countries are to achieve the Millennium Development Goal on maternal mortality.