Purpose: The purpose of this study was to develop a small animal PET using dual layer phoswich detector to minimize parallax error that degrades spatial resolution at the outer part of field-of-view (FOV). Materials and Methods: A simulation tool GATE (Geant4 Application for Tomographic Emission) was used to derive optimal parameters of small PET, and PET was developed employing the parameters. Lutetium Oxyorthosilicate (LSO) and Lutetium-Yttrium Aluminate-Perovskite (LuYAP) was used to construct dual layer phoswitch crystal. 8 × 8 arrays of LSO and LuYAP pixels, 2 mm × 2 mm × 8 mm in size, were coupled to a 64-channel position sensitive photomultiplier tube. The system consisted of 16 detector modules arranged to one ring configuration (ring inner diameter 10 cm, FOV of 8 cm). The data from phoswich detector modules were fed into an ADC board in the data acquisition and preprocessing PC via sockets, decoder block, FPGA board, and bus board. These were linked to the master PC that stored the events data on hard disk. Results: In a preliminary test of the system, reconstructed images were obtained by using a pair of detectors and sensitivity and spatial resolution were measured. Spatial resolution was 2.3 mm FWHM and sensitivity was 10.9 cps/μCi at the center of FOV. Conclusion: The radioactivity distribution patterns were accurately represented in sinograms and images obtained by PET with a pair of detectors. These preliminary results indicate that it is promising to develop a high performance small animal PET. (Korean J Nucl Med 38(5):338-343, 2004)