To minimize fluid leakage and improve rotordynamic stability of traditional seals, a new kind of radial annular seal is presented in this article. The structure and the sealing principle are analyzed. Compared to the traditional labyrinth seal, the fluid leakage direction is altered from the axial to radial direction. The flow resistance is increased, and the flowinduced force is reduced greatly. There is also a tremendous improvement in the wear resistance of the seal. Threedimensional numerical models of the traditional labyrinth seal and radial annular seal are set up. Calculated results show that the discharge coefficient of the radial annular seal is about 20% lower than that of the labyrinth seal. Though the rotating speed has a small influence on the radial seal force for both the radial annular seal and labyrinth seal, it has a large effect on the tangential seal force. The tangential seal force increases with the increasing speed, and the destabilizing force in the radial annular seal is reduced greatly when compared to that in the labyrinth seal. The radial seal force of the radial annular seal is about 1.5-2.5 times as strong as that of the labyrinth seal. The tangential seal force is about 30-50% lower than that of the labyrinth seal under the same eccentricity, and this ratio becomes larger and larger with the increasing speed. Finally, the dependency of the seal characteristics on the design parameters is studied. It is shown that the optimum ratios of the clearance s to the tooth thickness b (s/b) for the outward and inward flows are 4.5-5.5 and 11-13, respectively. The flow characteristics perform best with the ratio of the seal chamber width B to the tooth height H (B/H) on the same order of 5.5-7 for the two kinds of flows.