Avian influenza (AI) is a zoonotic viral endemic disease that affects poultry, swine, and mammals, including humans. Highly pathogenic avian influenza (HPAI) is caused by influenza type A virus subtypes H5, and H7 which are naturally carried by a wild bird and often affect domestic poultry. Avian influenza (AI) is a major problem worldwide that causes significant economic losses in the poultry sector. Since 2003, the widespread H5N1 HPAI in poultry has led to high mortalities resulting in huge economic losses in the poultry sector in Indonesia. Domestic poultry is a key source of income that contributes to economic growth, both directly and indirectly, by reducing poverty among the people living in rural communities. Furthermore, in many developing countries, including Indonesia, rural people meet a portion of their food needs through backyard poultry. Nevertheless, this sector is strongly affected by biosecurity hazards, particularly in Indonesia by HPAI infections. Avian influenza (AI), subtype H5N1 has zoonotic significance, posing major risks to public health and poultry. Due to close interaction between wild migratory birds and ducks, the domestic poultry sector in Indonesia is directly affected by this virus. This virus continues to be ubiquitous in Indonesia as a result of the unpredictable mutations produced by antigenic drift and shift, which can persist from a few days to several years. In this review, the epidemiology and impact, of highly pathogenic avian influenza H5N1 subtype virus infection on backyard poultry in Indonesia were discussed.