Aquaculture practices are considered a profitable business and are gaining popularity in Pakistan. Small farmers produce a sizeable amount of fish. The fish waste removed at the farm level and/or fishermen’s end is utilized with low economic return. Fish waste produced at the farm level generally is causing environmental pollution as well. A very small amount of fish waste is used to extract the oil using crude heating technology, which is unacceptable, uneconomical, and unhygienic. Extracted oil from wastes of aquatic resources is used as raw material for production of biodiesel around the world. In view of this scenario, a study was conducted to design and develop an indigenous small-scale fishoil extraction unit. A batch-type oil extraction unit is designed in this study, which further evaluated the performance of the developed unit. The extraction unit consists of a crusher, cooker, and centrifuge system. The crusher and centrifuge system were equipped with 2 hp and 1 hp electric motors, respectively. The motor has a revolution capacity of about 1,450 rpm. A double jacket fully water-filled system is proposed with an agitator installed in the cooker. A 1 hp electric motor was provided to operate an agitator at 40 rmp. The centrifuge unit has a double screening mechanism. The extraction unit is tested at a small fish farm near Muzaffargarh, Punjab, Pakistan. The fish oil is successfully separated from fish wastes with the help of a newly designed small-scale oil extraction unit. The tests showed that 90 minutes is required to process one batch of fish waste. The extraction unit has the capacity to process 15-20 kg of fish waste in a single batch. Research for producing bio-fuels from extracted fish oil is at its initial stages and there is a substantial need for further research to study the other economic issues related to bio-fuels and evaluate the oil extraction unit.