This paper analyzes the potential of small hydro power plants in Croatia. According to the current legislation in Croatia, small hydro power plant refers to those with installed capacity up to 10 MW. Considering the accession of Croatia to the European Union, which promotes greater integration of renewable energy sources, and the need for adjustment of Croatian energy policy goals to the EU goals, the main task of this paper is to determine the potential for the construction of small hydro power plants in Croatia. First researches on small hydro power potential in Croatia began in the early 1980s, when the term small hydro power plant referred to plants with installed capacity up to 5 MW. Earlier studies on potential did not consider any possible limitations which reduce technical potential of small hydro power plants, such as environmental constraints and spatial planning restrictions. Therefore, this paper clarifies the difference between natural hydro potential, technical hydro potential and environmentally acceptable hydro potential. Taking into account the differences between these terms, all existing researches on the small hydro power plants potential in Croatia were collected and analyzed and an overview of the most likely locations for the construction of small hydro power plants in Croatia was given. The knowledge on legislation regarding small hydro power plants is relevant for the realization of such projects, especially in the field of energy sector and environmental protection, as well as spatial planning. Therefore, a detailed analysis of the legislative framework for small hydro power plants was made, based on which the most significant steps in the procedure of project implementation were determined. Given that the existence of technical potential is not enough to start a project, it is necessary to analyze the economic and financial side of small hydro power plant projects and the possibilities for financing such projects. Analysis of economic and financial profitability of one small hydro power plant was made in this paper, with brief analysis of the amount of investment costs and operational and maintenance costs of small hydro power plants in general. Given the very high specific investments, a certain co-financing of the construction or the electricity production from small hydro power plants is necessary in order for such projects to be paid off in a reasonable time period. Thus the existing forms of financial support for small hydro power projects in Croatia, as well as in other EU countries, were analyzed. Based on all conducted analyses, it can be concluded that there is significant potential for small hydro power plants construction in Croatia, and realization of such projects contributes to achievement of the European Union energy goals. However, very complex and time consuming administrative procedures as well as high initial investment costs significantly complicate and delay the implementation of small hydro power plant projects in Croatia