This paper addresses the conceptual design of direct-drive manipulators which have good promise for high speed, high precision manipulation. In the design methodology presented, the procedure begins by considering the kinematic aspects and ends by configuring manipulator structures with promising kinematic and dynamic characteristics. Based on the conceptual design considerations, a novel 3 DOF (RRR) direct-drive manipulator is proposed and analyzed. The manipulator structure has only five links and a compact configuration. Manipulator kinematics and dynamics are analyzed. Design guidelines are derived for static balancing of the manipulator and for minimizing the inertias driven by the motors. Operational configurations that either improve or worsen the kinematic and dynamic behaviour or characteristics of the manipulator are identified. The proposed design has an advantage over many currently known direct-drive manipulators for achieving two desirable mechanical features, namely: static balancing and compactness (smaller driven inertias).