The objective of this study is to determine factors affecting the technical efficiency of the inshore fisheries in Kuala Terengganu. Data for the study was collected from a survey conducted between June and August 2007 where 100 fishermen in 14 villages were chosen by stratified sampling. Data envelopment analysis (DEA) and Tobit analysis were employed to determine the technical efficiency level and factors influencing technical efficiency among the fishermen. Results of the study show that, most fishing units exhibit a low degree of technical efficiency. This implies that either fishing inputs were used inefficiently or insufficient inputs were used in fishing activities. The mean technical efficiency for the sample was estimated to be 55% for the peak season and 40% for the non-peak season. About 37% and 62% of the fishermen had less than 40% level of technical efficiency in peak season and non-peak season respectively. Management variables (planning, staffing and controlling) and demographic variables (size of horsepower, size of family and formal education) exert positive effects on technical efficiency of inshore fisheries in Kuala Terengganu. These findings suggest that there is much room for improvement in efficiency among a large segment of the inshore fishermen. With appropriate training and using more advanced technologies, fishermen’ level of technical efficiency can be raised.