The dc grid is emerging as a new electric power distribution concept for several types of vessels due to its higher fuel efficiency compared with the conventional ac grid. Until today, wound rotor generators (WRGs) and diode rectifiers have been applied to the generation part of the onboard dc grid although the efficiency, weight, reliability, and footprint of the WRGs are inferior to those of permanent magnet generators (PMGs). In this article, the possibility of adopting the PMG in the onboard dc grid instead of the WRG is studied. According to the analysis, even though the PMG is inherently incapable of adjusting rotor flux, the rectified dc voltage can be controlled in a certain range under all load conditions. Simultaneously, the diesel engine can be controlled near its optimal operating line (OOL) to minimize fuel consumption. The controllability of the rectified dc voltage of the PMG is verified by computer simulation and small-scaled experimental tests. When comparing the operating trace of the proposed system to the specific fuel oil consumption (SFOC) map of a 350-kW diesel engine, i.e., AD158TI, the fuel-saving by applying the PMG is expected to be more than 10% at light load condition and around 3% average in overall operating conditions.