The permanent-magnet-biasing saturated core fault current limiter (PMFCL) is one of the most promising devices to limit the fault current. To improve the biasing ability of permanent-magnets (PMs) and reduce the cost of PMFCL, this paper proposes a novel compact permanent-magnet-biased fault current limiter (CPMFCL). The three-limb structure can reduce the size and cost; the optimal small-section structure can improve the biasing ability of PMs and reduce the usage amount of PMs. First, the principle, equivalent magnetic circuit, and small-section optimized structure are introduced. To validate the principle and performance of CPMFCL, various finite element analysis simulation and optimization study are performed in Maxwell-3D. A 220 V/10 A CPMFCL prototype is designed and tested. The simulation and experimental results demonstrate that, compared with traditional PMFCLs, the CPMFCL has the advantages of smaller size, better biasing capacity of PMs, lower possibility of demagnetization, and excellent fault clipping performance.