Indonesia is the fourth most populous country in the world with a total population of more than 260 million people, of which about 52% live in urban areas. It has been predicted that by 2025, 67.5% of population will live in cities. This situation will create a huge burden for basic urban infrastructure, especially sewerage systems. It is estimated that about 95% of the human waste in Indonesia ends up untreated or partially treated in septic tanks before being discharged either into open water bodies or onto soil, contaminating the living environment, and causing huge negative impacts to human health and economic development. Although more than 90% of urban households in Indonesia have access to septic tanks, most of the septic tanks do not function well due to poor design and lack of proper de-sludging, which are considered critical factors to ensure good performance of the tanks. In addition, collected sludge from the tanks is often illegally discharged into the open environment, or it is improperly treated or re-pumped into sewerage system without proper treatment, despite the fact that more than 150 septage treatment plants have been constructed across the country over the past 20 years. The study aimed to conduct a comprehensive and in-depth investigation as a baseline study on septage management in urban areas of Indonesia, with a case study in Bandung and Denpasar cities, in order to have a better understanding of actual challenges and opportunities for improved performance of onsite sanitation systems as well as septage management across its sanitation service chain. Septage flow diagrams have been developed for the studied cities, based on both secondary and primary data collected from the field, which provides a new and innovative way to engage sanitation experts, political leaders and civil society in coordinated discussions about septage management at the city level. In addition, this research project also investigate alternative business model for sustainable septage sludge management in the urban areas of Indonesia. Different aspects related to septage management have been investigated by utilizing a sanitation service chain system approach, which covers a range of relevant aspects including regulatory, institutional arrangements, technical and financial for septage management. The results from this study assists relevant policy makers and sanitation planners in the cities of Indonesia in identifying the most suitable septage management solution under each local context.