A total of £501,000 is being awarded to 31 organisations and communities this year.
On a visit to the Dumfries and Galloway Regional After School Care Association, which received the largest award, Lord Lindsay said: 'By supporting projects throughout Scotland which improve opportunities and provide innovative solutions to particular challenges, this new fund enables people in rural areas to realise often long-cherished dreams and put into practice their ideas for enhancing their communities.
'The diversity of projects receiving grants is absolutely staggering.
'Selecting the successful projects from more than 90 applications was not an easy task: the breadth and quality of applications was impressive, and I am grateful to the Scottish National Rural Partnership for its advice,' said Lord Lindsay.
The Rural Challenge Fund was set up on 1 April 1996 as part of the new Scottish Rural Partnership Fund to encourage rural projectrs which propose innovative ways of solving particular rural problems or improve opportunities for rural communities.
The applications were considered by the SNRP before a final decision was taken by the government.
Under the Rural Challenge Fund, financial support for a minimum of one year and a maximum of three years is available and is limited to 50% of eligible costs, although exceptional projects may receive more.