Fish are valuable sources of nutrients necessary for physical and cognitive development and playvital roles in maintaining a healthy diet. However, the fish market faces challenges related to postharvest physical loss, which affects supply, food security, and fishermen's income. This study aimed to identify the factors contributing to postharvest physical loss within the fish value chain at Lake Hawassa. The data from 166 fishermen and 7 key informants were analyzedusing descriptive statistics such as the mean and standard deviation, along with the 2SLS model. The findings revealed that the average quantity loss was 5.99 kg per individual per day, signifying its significance in this context. Additionally, other key metrics included an average unit cost of ETB of 1.95, a unit price of ETB of 48.28, and an average daily fish catch of 45 kg. The 2SLS model output revealed that fish catch volume, access to market information, education, access to extension services, fish value addition, membership in a fishercooperative, distance from the landing site to the nearest market, and nonfarmincome significantly affected postharvest physical loss. Considering the significant impact of these factors on physical loss after harvest, it is imperative for policymakers to prioritize and allocate resources to enhancing access to market information, improving fishers' education, and strengthening extension services. Additionally, promoting value addition in the fishery sector and supporting the establishment of fisher cooperatives can play a crucial role in reducing postharvest losses and improving the overall economic conditions of fishers. Furthermore, investing in infrastructure to facilitate better access to markets can also contribute to minimizing physical losses and ensuring a steady supply of fish for consumers. By addressing these key factors, the government and relevant organizations can work toward creating a more sustainable and efficient fishery sector.