Self-interaction (SI) error, which results when exchange-correlation contributions to the total energy are approximated, limits the reliability of many density functional approximations. The Perdew-Zunger SI correction (PZSIC), when applied in conjunction with the local spin density approximation (LSDA), improves the description of many properties, but overall, this improvement is limited. Here, we propose a modification to PZSIC that uses an iso-orbital indicator to identify regions where local SICs should be applied. Using this local-scaling SIC (LSIC) approach with LSDA, we analyze predictions for a wide range of properties including, for atoms, total energies, ionization potentials, and electron affinities and, for molecules, atomization energies, dissociation energy curves, reaction energies, and reaction barrier heights. LSIC preserves the results of PZSIC-LSDA for properties where it is successful and provides dramatic improvements for many of the other properties studied. Atomization energies calculated using LSIC are better than those of the Perdew, Burke, and Ernzerhof generalized gradient approximation (GGA) and close to those obtained with the strongly constrained and appropriately normed meta-GGA. LSIC also restores the uniform gas limit for the exchange energy that is lost in PZSIC-LSDA. Further performance improvements may be obtained by an appropriate combination or modification of the local scaling factor and the particular density functional approximation.