Small-scale power-generation systems offer an alternative to traditional batteries because of the high-energy density of hydrocarbon fuels. Combustion at small scales presents several challenges, including high heat loss and short flow residence times. Heat recirculation is an effective method to limit heat loss and improve combustion performance. However, new methods of achieving heat recirculation in a small volume must be developed for practical devices. To meet this requirement, a heat-recirculating, lean premixed combustion system using porous inert media (PIM) in the combustion chamber and in the preheating annulus around the combustor has been developed. System performance for a range of operating conditions was determined experimentally using methane fuel. Measurements include preheat and product gas temperatures and emissions of CO and NOx. Results show that the reactants were preheated in excess of 600 K by recirculating thermal energy from the reaction zone. Heat loss to the surroundings decreased and heat recirculation to the reactants increased with PIM in the annulus and with insulation of exterior surfaces of the system.