Although the parallel mechanisms have the advantages of high accuracy, velocity, stiffness, and payload capacity, the shortcomings of the space utilization and workspace limit the applications in the confined space. A novel 3 degrees of freedom spatial parallel manipulator 3-PSR-O (prismatic-spherical-revolute) is proposed, which possesses a compact architecture and extended workspace while maintaining the inherent advantages of the parallel mechanisms. The direct-inverse position, singularity and workspace are investigated. The mapping method is adopted in the position analysis, and the closed form solution is derived in the form of a six order equation. The singularity analysis of the mechanism is also carried out based on the geometrical constraints, including six singularity boundaries. A feature boundary, which is independent of the prismatic joints’ stroke limit, is obtained by integrating the six singularity boundaries. According to the formation of the reachable workspace, a concept of basic workspace is also introduced and presented in the analytical way. By demarcating the basic workspace along the central height with the feature boundary, the reachable workspace can be derived and analyzed more efficiently. Finally, a comparative study on the space utilization between the 3-PSP parallel mechanism and the new mechanism is also presented. The area of feature boundary of the new mechanism is about 140% of the 3-PSP parallel mechanism, while its installation radius is only 1/2 of the 3-PSP parallel mechanism. The proposed parallel mechanism shows great space utilization, and is ideally suited for applications in confined space occasions such as immersion lithography, nano-imprint etc.