Current challenges facing us in developing dedicated position emission tomography (PET) system for metabolic breast mammography (PEM) and small animal (ANIPET) are to achieve high spatial resolution (less than 2 mm) and high efficiency. It is also crucial to extend the sensitive areas of PEM detectors to their periphery in order to overcome the difficulty in imaging near a patient's chest wall. This limitation of the periphery dead region was revealed in the clinical trials of our previously developed PEM-I system. In the new study, we developed prototype detectors by using position-sensitive photomultiplier tubes (PS-PMTs) and pixelated bismuth germanate (BGO) crystals with depth encoding scheme to detect and localize gamma rays. The procedures in crystal processing include cutting, polishing, encapsulating, separating, and re-gluing. We also developed front-end electronic circuits including high-voltage dividers, anode resistor chains, position readout circuits, and last dynode timing circuits. Methods for combining four PS-PMTs with simple X+, X-, Y+, Y- outputs have been developed to further simplify the position recording. The detectors were constructed in the structure of array (two in the system)-module (four in each array)-unit (four in each module). The basic unit of one crystal and one PS-PMT can be field replaceable. Our new prototype detectors show that the proposed PEM-II system has a spatial resolution of 1.8 mm (versus 2.8 mm in PEM-I), a timing resolution of 10.3 ns (versus 12 ns in PEM-I), and a field-of-view of 88 mm /spl times/ 88 mm (versus 64 mm /spl times/ 56 mm in PEM-I). Compared with our previous PEM-I system, it demonstrates that the design improves the spatial resolution, enhances the detector field-of-view, and significantly reduces the peripheral dead regions.