It is argued that trophy hunting of large, charismatic mammal species can have considerable conservation benefits but only if undertaken sustainably. Social-ecological theory suggests such sustainability only results from developing governance systems that balance financial and biological requirements. Here we use lion (Panthera leo) trophy hunting data from Tanzania to investigate how resource ownership patterns influence hunting revenue and offtake levels. Tanzania contains up to half of the global population of free-ranging lions and is also the main location for lion trophy hunting in Africa. However, there are concerns that current hunting levels are unsustainable. The lion hunting industry in Tanzania is run by the private sector, although the government leases each hunting block to companies, enforces hunting regulation, and allocates them a species-specific annual quota per block. The length of these leases varies and theories surrounding property rights and tenure suggest hunting levels would be less sustainable in blocks experiencing a high turnover of short-term leases. We explored this issue using lion data collected from 1996 to 2008 in the Selous Game Reserve (SGR), the most important trophy hunting destination in Tanzania. We found that blocks in SGR with the highest lion hunting offtake were also those that experienced the steepest declines in trophy offtake. In addition, we found this high hunting offtake and the resultant offtake decline tended to be in blocks under short-term tenure. In contrast, lion hunting levels in blocks under long-term tenure matched more closely the recommended sustainable offtake of 0.92 lions per 1000 km2. However, annual financial returns were higher from blocks under short-term tenure, providing $133 per km2 of government revenue as compared to $62 per km2 from long-term tenure blocks. Our results provide evidence for the importance of property rights in conservation, and support calls for an overhaul of the system in Tanzania by developing competitive market-based approaches for block allocation based on long-term tenure of ten years.