Small-scale capture fisheries have a very important place globally, but unfortunately are still mostly unregulated. Typically, they are defined based on capture fisheries characteristics, technical attributes of fishing vessels, and socio-economic attributes of fishers. Indonesia uses the term ‘small-scale fisher’ (nelayan kecil), currently defined to include fishing boats of <10 gross tons (GT), which previously covered only boats of <5 GT. Because small-scale fishers are by law granted a privilege by government to be exempted from fisheries management measures (e.g. fisheries licensing system), its current definition jeopardizes fisheries sustainability and significantly increases the size of unregulated and unreported fisheries. It is also unfair, as it legitimizes the payment of government support to relatively well-off fishers. This paper aims to develop a functional definition of small-scale fisheries (perikanan skala kecil) to guide policy implementation to improve capture fisheries management in Indonesia. A definition of small-scale fisheries is proposed as a fisheries operation, managed at the household level, fishing with or without a fishing boat of <5 GT, and using fishing gear that is operated by manpower alone. This definition combines attributes of the fishing vessel (GT), the fishing gear (mechanization), and the unit of business decision making (household) to minimize unregulated and unreported fishing and focus government aid on people who are truly poor and vulnerable to social and economic shocks. The terms small-scale fisheries and small-scale fishers must be legally differentiated as the former relates to fisheries management and the latter relates to empowerment of marginalized fishers.