A novel method for radiation efficiency measurement of small-size radiators such as mobile phones and other handheld wireless devices is presented. The method is based on the accurate determination of the power which is dissipated in the antenna under test using a calorimetric approach. The principle of the method, some of its variants, and the experimental setup are described. Application of the method is demonstrated for several test objects with different efficiencies. Accuracy is validated by comparison of calorimetric radiation efficiency against numerical estimates and independent measurements using the reflection efficiency method, a generalized variant of the Wheeler cap method, whose basic limitations are briefly discussed. Due to the calorimetric principle employed in the proposed new method, it qualifies equally well as a highly accurate reference method for radiation efficiency measurements and as a low-cost alternative to three-dimensional pattern integration and Wheeler cap type efficiency estimates.