The polluter pays principle is one of the Treaty-based principles of the Community environmental law. It provides that the polluter is financially liable for compliance with the requirements set by the existing legislation concerning environmental protection and has, therefore, i.a. been referred to as non-subsidisation principle. Nonetheless, the polluter pays principle is also a key principle within the European Commission's practice of controlling State aid for environmental objectives. This contribution explores the apparent paradox of basing the policy on controlling State aid for environmental protection on the polluter pays principle and delineates approaches to reconcile that principle with State aid practice.