A blow-by gas ventilation system particularly suited for use with a small watercraft includes a oil separation chamber preferably disposed within a plenum chamber defined by an air intake box. An inlet tube permits blow-by gases to move from the crankcase chamber of the engine to the oil separation chamber. An outlet allows blow-by gases to move from the oil separation chamber to the plenum chamber. Desirably, an outlet tube connects the outlet to an opening in an intake port of the induction system to discharge blow-by gases into the intake port. The oil separation chamber may be defined by a cover member, along with a portion of the interior surface of the air intake box.