Background Innovative models to distribute oral HIV self-tests (HIVST) provide an opportunity to increase access to HIV testing, especially for hard-to-reach populations. This study aimed to describe the acceptability of unsupervised peer-distribution of HIVST as a method to scale-up HIV testing. Methods In this study, lay counsellors or community health workers provided HIVST kits to primary recipients (PRs) for distribution to their sexual partners, anyone in their social network (termed secondary recipients) or for self-testing, from September 2018 to March 2020. The study was conducted in Eshowe and Mbongolwane areas in KwaZulu-Natal, South Africa. A structured questionnaire was administered during the recruitment and passive follow-up, when people came for confirmatory HIV testing. Electronic records were retrospectively examined to determine initiation of antiretroviral treatment (ART) for all HIVST users and non-users. Results Among 36,708 people approached to be primary recipients, 9,891 (26.9%) accepted; 31,341 HIVST kits were distributed with a median of three (IQR: 2–4) per peer. PRs were predominately recruited at primary health clinics (PHCs). However, acceptability of HIVST was thrice as high at community-based testing sites compared to PHCs (64.5% vs. 21.0%; p<0.001). During the study period, 34,715 adults were tested for HIV at both PHCs and community-based testing sites; of these, 1,089 individuals reported HIVST use. Among HIVST users, 893 (82.0%) returned to the clinic for confirmatory testing after testing negative on HIVST; 196 (17.9%) were confirmed HIV positive following a positive HIVST. After excluding 36/196 (18.4%) participants for whom clinical records could not be found in electronic register and 25/160 (15.6%) who were already on ART before receiving HIVST, 129/135 (95.5%) initiated ART, whereas 2,362/2685 (88%) of HIV positive HIVST non-users-initiated ART. Conclusion Unsupervised peer-distribution of HIVST was feasible and acceptable, with more than 25% accepting to be peer-distributors. Acceptability of HIVST was thrice as high in community sites compared to clinics.