Efforts to develop a high-resolution, high-sensitivity small-animal positron emission tomgraphy (PET) scanner were continued. An increasingly complete computer simulation, begun in the previous reporting period, was used to assess the effects of altering data acquisition techniques and the physical parameters of a pair of detectors comprising position-sensitive photomultiplier tubes (PSPMTs) coupled to pixelated or continuous slab scintillators of different kinds. These results have suggested a system design based on the new scintillator lutetium oxyorthosilicate that will have performance characteristics substantially better than existing scanners. An investigation was also begun to establish the effects of iterative three-dimensional expectation maximumization maximum likelihood (EM-ML) reconstruction of three-dimensional PET data sets. Early results in phantoms suggest that this method, though extremely computationally intensive, can recover resolution beyond that exhibited by the physical imaging system. A three-dimensional data set from an F-18 fluoride-labeled rat skull, acquired with a pair of slab NaI(Tl) of PSPMT cameras and reconstructed with this algorithm, yielded images consistent with this prediction.