A new dualpermanentmagnet excited vernier (DPMEV) machine was proposed, in which the power density and torque density were further improved to meet the low speed and high torque operating conditions of direct drive systems. Two sets of permanent magnets (PMs) were placed on stator and rotor, respectively, and the PM magnetic field could be modulated to effective harmonic magnetic field components with low polepair number and high speed by the dualmodulation effect of stator and rotor teeth. Then the armature winding was designed according to the effective harmonic magnetic fields to achieve the coupling between the magnetic fields excited by two sets of PMs and armature windings. The topology of DPMEV machine was introduced. The air gap flux density was analyzed based on the equivalent magnetic circuit method, which proved the improvement potentiality of power density and torque density based on the dualmodulation effect. The performances of DPMEV machine were calculated and analyzed by the finite element method, verifying the advantages of high power density and high torque density which were suitable for the direct drive system.