Abstract Background The HIV epidemic in Sub Saharan Africa has been traditionally assumed to be driven by high risk heterosexual and vertical transmission. However, there is an increasing body of data highlighting the disproportionate burden of HIV infection among MSM in the generalized HIV epidemics across of Southern Africa. In South Africa specifically, there has been an increase in attention focused on the risk status and preventive needs of MSM both in urban centers and peri-urban townships. The study presented here represents the first evaluation of HIV prevalence and associations of HIV infection among MSM in the peri-urban townships of Cape Town. Methods The study consisted of an anonymous probe of 200 men, reporting ever having had sex with another man, recruited through venue-base sampling from January to February, 2009. Results Overall, HIV prevalence was 25.5% (n = 51/200). Of these prevalent HIV infections, only 6% of HIV-1 infected MSM were aware of their HIV status (3/50). 0% of men reported always having safe sex as defined by always wearing condoms during sex and using water-based lubricants. Independent associations with HIV infection included inconsistent condom use with male partners (aOR 2.3, 95% CI 1.0-5.4), having been blackmailed (aOR 4.4, 95% CI 1.6-20.2), age over 26 years (aOR 4.2, 95% CI 1.6-10.6), being unemployed (aOR 3.7, 95% CI 1.5-9.3), and rural origin (aOR 6.0, 95% CI 2.2-16.7). Bisexual activity was reported by 17.1% (34/199), and a total of 8% (16/200) reported having a regular female partner. Human rights violations were common with 10.5% (n = 21/200) reporting having been blackmailed and 21.0% (n = 42/200) reporting being afraid to seek health care. Conclusions The conclusions from this study include that a there is a high risk and underserved population of MSM in the townships surrounding Cape Town. The high HIV prevalence and high risk sexual practices suggest that prevalence will continue to increase among these men in the context of an otherwise slowing epidemic. These data further highlight the need to better characterize risk factors for HIV prevention and appropriate targeted combination packages of HIV interventions including biomedical, behavioural, and structural approaches to mitigate HIV risk among these men.