Detectors with depth-encoding allow a PET scanner to simultaneously achieve high sensitivity and high spatial resolution. Methods: A prototype PET scanner, consisting of depth-encoding detectors constructed by dual-ended readout of lutetium oxyorthosilicate (LSO) arrays with 2 position-sensitive avalanche photodiodes (PSAPDs), was developed. The scanner comprised 2 detector plates, each with 4 detector modules, and the LSO arrays consisted of 7 · 7 elements, with a crystal size of 0.9225 · 0.9225 · 20 mm and a pitch of 1.0 mm. The active area of the PSAPDs was 8 · 8 mm. The performance of individual detector modules was characterized. A line-source phantom and a hot-rod phantom were imaged on the prototype scanner in 2 different scanner configurations. The images were reconstructed using 20, 10, 5, 2, and 1 depth-of-interaction (DOI) bins to demonstrate the effects of DOI resolution on reconstructed image resolution and visual image quality. Results: The flood histograms measured from the sum of both PSAPD signals were only weakly depth-dependent, and excellent crystal identification was obtained at all depths. The flood histograms improved as the detector temperature decreased. DOI resolution and energy resolution improved significantly as the temperature decreased from 20°C to 10°C but improved only slightly with a subsequent temperature decrease to 0°C. A full width at half maximum (FWHM) DOI resolution of 2 mm and an FWHM energy resolution of 15% were obtained at a temperature of 10°C. Phantom studies showed that DOI measurements significantly improved the reconstructed image resolution. In the first scanner configuration (parallel detector planes), the image resolution at the center of the field of view was 0.9-mm FWHM with 20 DOI bins and 1.6-mm FWHM with 1 DOI bin. In the second scanner configuration (detector planes at a 40°angle), the image resolution at the center of the field of view was 1.0-mm FWHM with 20 DOI bins and was not measurable when using only 1 bin. Conclusion: PET scanners based on this detector design offer the prospect of high and uniform spatial resolution (crystal size, ;1 mm; DOI resolution, ;2 mm), high sensitivity (20-mm-thick detectors), and compact size (DOI encoding permits detectors to be tightly packed around the subject and minimizes number of detectors needed). Over the past decade, many small-animal PET scanners have been developed (1-12), and this technology has played a very important role in the rapidly growing field of molecular imaging. High sensitivity is needed to increase signal-to-noise ratio of the images to reliably detect lower levels of radiotracer uptake and to reduce the injected dose (reducing radiation dose to the subject) (13) and scan time (increasing temporal resolution for dynamic studies). High spatial resolution is required to detect small structures and lesions and to improve quantification by reducing the partialvolume effect. A compromise between sensitivity and spatial resolution due to depth-of-interaction (DOI) effects always exists in small-ani...