Since the implementation Cabotage Principle in 2005, the number of ships in Indonesia have increased. Most of them are dominated by old-imported or locally built general cargo and tug and barge set vessel. Based on Hong Kong Convention, ships life cycle is limited to 25 years old because they will be uneconomical to be operated and need to be recycled. Considering that ships has great amount of hazardous materials, therefore ship recycling need to be conducted in a safe and environmentally friendly way. This study aims to design the environmentally friendly or green ship recycling yard with capacity of maximum 30.000 DWT ship or 330 ft barge and tug-boat set. Literature study on rules and regulations, such as Hong Kong Convention, are used to determine the boundaries and recommendations for green recycling process. By knowing the ship's weight and recycling process, the recycling yard's facilities can be determined. This layout will use docking process and ensure no waste contaminates the sea from the recycling process because the cutting process will be done on land. There will be a hazardous waste management process following the existing regulation from the Indonesian Government.