The contra‐rotating machine (CRM) has been a preferable selection of the contra‐rotating propulsion system (CRPS) owing to its high efficiency, high compactness, and low noise. However, the conventional CRM with rotating stator has the problem of brush and slip ring, and the conventional brushless CRM has the problem of coordinated control of equal and opposite torque. Aiming at the above problems, this article proposes a transverse‐dislocated magnetic‐field modulated brushless contra‐rotating machine (TDMFM‐BCRM). The proposed TDMFM‐BCRM has some advantages of no rotating winding, no associated brushes and slip rings, and equal and opposite torques at any time, therefore it has good potential for the CRPS. The working principle of the TDMFM‐BCRM including three dimensional magnetic‐field modulated theory, back electromotive force (EMF) generation, and torque relation is studied. Then, the influences of main parameters including magnetic block parameters and PM sizes on torques are investigated. The critical electromagnetic performances of the TDMFM‐BCRM are analysed. A prototype of TDMFM‐BCRM is manufactured and measured to validate the above analysis. Finally, the comparison of the TDMFM‐BCRM and the existing schemes are analysed.