New forms of institutional support within modern multi-level fisheries governance are urgently needed to address the decline of coastal and inland fisheries. The EU-funded Fisheries Local Action Group (FLAG) initiative promises new hope to small-scale fishers by channelling support for the development of local fishing communities. This paper analyses the potential of FLAGs to contribute towards revitalizing small-scale fisheries in Nordic settings. Drawing on documents, surveys and interviews, we compare the implementation of FLAGs in Finland and Sweden. These countries were selected for analysis because they exhibit major differences in the implementation of FLAGs, alongside similarities in their coastal fisheries and social contexts. A special structural feature in Sweden is that FLAGs have been entirely integrated into Local Action Groups set up under the LEADER programme, an EU initiative that supports development projects in rural, coastal and urban areas. As a result, fisheries issues that used to be addressed by sectoral fishery groups are now subsumed into broader territorial initiatives. In Finland, the FLAG system still comprises independent fishery groups, which collaborate with LEADER groups. Our comparison of the two cases demonstrates the importance of dedicated institutional support for small-scale fisheries to enable them to access funding opportunities provided by the EU’s FLAG initiative. Our comparative perspective enables conclusions to be drawn regarding the pros and cons of different approaches to the implementation of this hierarchical funding system, and the extent to which they can help restore fishers’ self-reliance and benefit local fishing livelihoods.