Within mathematics curricula, algebra has been widely recognized as one of the most difficult topics, which leads to learning difficulties worldwide. In Indonesia, algebra performance is an important issue. In the Trends in International Mathematics and Science Study (TIMSS) 2007, Indonesian students' achievement in the algebra domain was significantly below the average student performance in other Southeast Asian countries such as Thailand, Malaysia, and Singapore. This fact gave rise to this study which aims to investigate Indonesian students' difficulties in algebra. In order to do so, a literature study was carried out on students' difficulties in initial algebra. Next, an individual written test on algebra tasks was administered, followed by interviews. A sample of 51 grade VII Indonesian students worked the written test, and 37 of them were interviewed afterwards. Data analysis revealed that mathematization, i.e., the ability to translate back and forth between the world of the problem situation and the world of mathematics and to reorganize the mathematical system itself, constituted the most frequently observed difficulty in both the written test and the interview data. Other observed difficulties concerned understanding algebraic expressions, applying arithmetic operations in numerical and algebraic expressions, understanding the different meanings of the equal sign, and understanding variables. The consequences of these findings on both task design and further research in algebra education are discussed.