The origin of M32, the closest compact elliptical galaxy (cE), is a long-standing puzzle of galaxy formation in the Local Group. Our N-body/smoothed particle hydrodynamics simulations suggest a new scenario in which the strong tidal field of M31 can transform a spiral galaxy into a compact elliptical galaxy. As a low-luminosity spiral galaxy plunges into the central region of M31, most of the outer stellar and gaseous components of its disk are dramatically stripped as a result of M31's tidal field. The central bulge component, on the other hand, is just weakly influenced by the tidal field, owing to its compact configuration, and retains its morphology. M31's strong tidal field also induces rapid gas transfer to the central region, triggers a nuclear starburst, and consequently forms the central high-density and more metal-rich stellar populations with relatively young ages. Thus, in this scenario, M32 was previously the bulge of a spiral galaxy tidally interacting with M31 several gigayears ago. Furthermore, we suggest that cE's like M32 are rare, the result of both the rather narrow parameter space for tidal interactions that morphologically transform spiral galaxies into cE's and the very short timescale (less than a few times 109 yr) for cE's to be swallowed by their giant host galaxies (via dynamical friction) after their formation.
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