Artisan and small-scale mining (ASM) plays an important role in employment and livelihoods in Tanzania. Estimates suggest that over 1,000,000 Tanzanians are engaged in mining, more than 90 percent of whom are in ASM. However, most ASM activities are taking place using rudimental technology causing negative impact on the environment and human health. Despite having laws and regulations in the mining sector in the country, the enforcement at the ASM has remained ineffective. There is a concern that the institutional framework governing the Mining Sector is not suitable for ASM and innovations are required to effectively governing the ASM activities. This study is a contribution towards achieving this goal. The study conducted a review of the institutional framework governing ASM, focusing on the gold subsector. It also undertook a comprehensive review of literature on ASM. In addition, about 100 ASM operators were interviewed in Nyarugusu area, Geita district. The study intended to highlight the strengths and weaknesses of the current institutional framework for ASM operators and suggests innovations to inform the policy and decision making process on how best ASM could enhance livelihoods without degrading the environment. It also adds to the body of knowledge on the current debate of environmental degradation under ASM through publication. The major conclusion is that the current institutional framework is not conducive for ASM activities and innovations are necessary for ASM operators to comply. Most of the decision making and compliancy regulatory bodies are centralised, a high number of ASM operators are not aware of the existing institutional framework and most of the regulations are not compatible with the ASM activities. These include the requirement for ASM operators to register their activities at the head quarters of the Ministry, the condition that each ASM operator to undertake environmental impact assessment (EIA) in his/her plot, insufficient involvement of local authorities at village and district levels to regulate the ASM activities, poor working technology and lack of ASM organisations/associations. The following innovations are recommended: decentralising ASM regulations to village and district levels including capacity building at these levels, introducing block EIA and management plans to accommodate a number of ASM operators and for joint responsibilities, strengthening cooperatives and associations, facilitating ASM operators access to credit and link ASM with medium/large scale mining and providing friendly formalisation processes.