The design, initial imaging performance, and model-based optimization of a dedicated cone-beam CT (CBCT) scanner for musculoskeletal extremities is presented. The system offers a compact scanner that complements conventional CT and MR by providing sub-mm isotropic spatial resolution, the ability to image weight-bearing extremities, and the capability for integrated real-time fluoroscopy and digital radiography. The scanner employs a flat-panel detector and a fixed anode x-ray source and has a field of view of ∼ (20×20×20) cm3. The gantry allows a "standing" configuration for imaging of weight-bearing lower extremities and a "sitting" configuration for imaging of upper extremities and unloaded lower extremities. Cascaded systems analysis guided the selection of x-ray technique (e.g., kVp, filtration, and dose) and system design (e.g., magnification factor), yielding input-quantum-limited performance at detector signal of 100 times the electronic noise, while maintaining patient dose below 5 mGy (a factor of ∼2-3 less than conventional CT). A magnification of 1.3 optimized tradeoffs between source and detector blur for a 0.5 mm focal spot. A custom antiscatter grid demonstrated significant reduction of artifacts without loss of contrast-to-noise ratio or increase in dose. Image quality in cadaveric specimens was assessed on a CBCT bench, demonstrating exquisite bone detail, visualization of intra-articular morphology, and soft-tissue visibility approaching that of diagnostic CT. The capability to image loaded extremities and conduct multi-modality CBCT/fluoroscopy with improved workflow compared to whole-body CT could be of value in a broad spectrum of applications, including orthopaedics, rheumatology, surgical planning, and treatment assessment. A clinical prototype has been constructed for deployment in pilot study trials.