Small-scale structure is studied in the context of dissipative dark matter, arising for instance in models with a hidden unbroken Abelian sector, so that dark matter couples to a massless dark photon. The dark sector interacts with ordinary matter via gravity and photon-dark photon kinetic mixing. Mirror dark matter is a theoretically constrained special case where all parameters are fixed except for the kinetic mixing strength, epsilon. In these models, the dark matter halo around spiral and irregular galaxies takes the form of a dissipative plasma which evolves in response to various heating and cooling processes. It has been argued previously that such dynamics can account for the inferred cored density profiles of galaxies and other related structural features. Here we focus on the apparent deficit of nearby small galaxies (``missing satellite problem"), which these dissipative models have the potential to address through small-scale power suppression by acoustic and diffusion damping. Using a variant of the extended Press-Schechter formalism, we evaluate the halo mass function for the special case of mirror dark matter. Considering a simplified model where Mbaryons propto Mhalo, we relate the halo mass function to more directly observable quantities, and find that for epsilon ≈ 2 × 10-10 such a simplified description is compatible with the measured galaxy luminosity and velocity functions. On scales Mhalo lesssim 108 Msolar, diffusion damping exponentially suppresses the halo mass function, suggesting a nonprimordial origin for dwarf spheroidal satellite galaxies, which we speculate were formed via a top-down fragmentation process as the result of nonlinear dissipative collapse of larger density perturbations. This could explain the planar orientation of satellite galaxies around Andromeda and the Milky Way.