This paper presents the world’s smallest inset permanent magnet synchronous motor (PMSM) with a soft magnetic composite (SMC) core, providing ease of manufacturing for micromachine applications without silicon steel laminations. The inset motor can offer an additional reluctance torque and higher torque density with a lower usage amount of permanent magnet. A 15 mm diameter inset motor was developed with the thickness of a tile-type permanent magnet which is limited to 1 mm by the manufacturer. The motor was designed with high torque density and low torque ripple by varying the interpole iron width for the rotor. Two inset motors were made using both SMC and silicon steel materials for comparison. The performance of the SMC motor was inferior to the silicon steel motor, but it still meets the specifications of the commercial market. If the thickness of the tile-type permanent magnet is further reduced, the micro inset motor with a SMC core can be easily mass-manufactured using powder sintering.