We have developed and constructed an MR-compatible single photon emission computed tomography (SPECT) system for small animal molecular imaging applications. The system consists of identical radiation imaging modules and a multi-pinhole collimator sleeve. The modular design results in a very compact system which allows for easy insertion into state-of-the-art small animal MRI systems. This development leads to a multi-modality system that allows one to accurately coregister SPECT and MR images in space and time. The MR-compatible SPECT unit has a barrel shape with 119-mm outer diameter designed to fit into an MRI system with a 120-mm diameter inner bore. The inner diameter of the SPECT unit is 35 mm which is large enough to fit a mouse, and provides a 30-mm diameter imaging field of view (FOV). The system does not require active cooling due to its low-power dissipation. The radiation sensor performance is not affected by the presence of the magnetic field from the MRI system. The results are very promising for applications of the SPECT/MR system to small animal imaging.