The Global Fund for AIDS, Tuberculosis and Malaria has suspended grants to Uganda after an investigation uncovered evidence of serious mismanagement of funds.
The Fund says auditors found a shortfall when grants in dollars were converted into Ugandan shillings.
It says five grants would be suspended until the end of October. A resumption of aid will depend on steps by Uganda to create a new system to disperse grants.
Uganda's health minister, Jim Muhwezi, told news agencies the decision was unfair and not good news.
So far, Uganda has received some $45 million out of some $200 million it has been allocated.
In making the announcement, the Global Fund said it will ensure that current projects for AIDS patients will not be disrupted.
The Ugandan government has been praised for its efforts in combating the deadly disease.
Some information for this report provided by Reuters and AP.