Since a high resolution PET system is needed for small animal imaging, especially for mouse studies, we developed a new small animal PET system that decreased the size of the scintillators to less than 1 mm. Our developed PET system used 0.5 × 0.7 × 5 mm3 LYSO pixels arranged in an 11 × 13 matrix to form a block with a 0.1 mm BaSO4 reflector between the pixels. Two LYSO blocks were optically coupled to two optical fiber based angled image guides. These LYSO blocks and image guides were coupled to a Si-PM array (Hamamatsu MPPC S11064-050P) to form a block detector. Eight block detectors (16 LYSO blocks) were arranged in a 34 mm inner diameter ring to form a small animal PET system. The block detector showed good separation for the 22 × 13 LYSO pixels in the two-dimensional position histogram. The energy resolution was 20% full-with at half-maximum (FWHM) for 511 keV gamma photons. The transaxial resolution reconstructed by filtered backprojection was 0.71 to 0.75 mm FWHM and the axial resolution was 0.70 mm. The point source sensitivity was 0.24% at the central axial field-of-view. High resolution mouse images were obtained using our PET system. The developed ultrahigh resolution PET system showed attractive images for small animal studies and has a potential to provide new findings in molecular imaging researches.