This study summarizes the main concepts involved in the assessment and management of fishing capacity. It discusses why capacity management and the problem of overcapacity have become key issues for fisheries management in the new millennium. The paper explains why overcapacity develops in the fishery and the role that fisheries management has played in contributing to this development in the past. Methods for estimating current and desired levels of capacity are discussed, and a range of potential indicators of overcapacity is described. The effectiveness of various capacity management programmes that have been applied in various fisheries around the world is also discussed, along with an explanation as to why many of these programmes have been ineffective. Potential management systems that have proven effective in reducing overcapacity are also presented and discussed.