Pinhole imaging is a promising approach for high spatial resolution single gamma emission imaging in situations when the required field of view (FOV) is small, as is the case for small animal imaging. However, all pinhole collimators exhibit steep decrease in sensitivity with increasing angle of incidence from the pinhole axis. This in turn degrades the reconstruction images, and requires higher dose of radiotracer. We developed a novel pinhole SPECT system for small animal imaging which uses two opposing and offset small cone-angle square pinholes, each looking at half of the FOV. This design allows the pinholes to be placed closer to the object and greatly increases detection efficiency and spatial resolution, while not requiring larger size detectors. Iterative image reconstruction algorithms for this system have been developed. Preliminary experimental data have demonstrated marked improvement in contrast and spatial resolution.