Solid waste management (SWM) represents an important issue for small islands. This research evaluates the municipal SWM system of the Pelagian archipelago, in Italy. The research aims to evaluate environmental and econoemic benefits of onsite treatment plants for the valorization of the organic fraction of municipal solid waste. The sizing of the anaerobic digestion (AD) and composting plant was developed, and the characteristics of the plant were used to conduct a cost analysis and an environmental life cycle assessment. The current waste management system (S0) has been compared with the new strategy proposed (S1). Results showed that S1 leads to save more than 250,000???y?1 due to the avoidance of organic waste final disposal and shipping, determining a payback time of about 7?years. Environmental benefits include a lowering of CO2-eq emission of more than 1100?tonnes per year and a reduction of all the six environmental impacts analysed. The outcomes represent a novel contribution to the scientific literature since the research provides the first comparison of quantitative data about environmental and cost benefits of onsite AD plants in small islands. The research underlines that onsite waste treatment systems are viable options to improve SWM systems in isolated regions.