The design and development of an axial-flux permanent-magnet air-cored generator for use as a direct drive generator with small-scale wind and water turbines is described. The generator is designed for simplicity and ease of manufacture and consists of two rotor discs each with permanent magnets located around its periphery. The stator is made of plastic and has a number of bobbin-wound armature coils located around its periphery. A three-phase prototype generator has been designed and built with 16 magnets per rotor disc, 12 armature coils (four per phase) and an overall diameter of 495 mm. The generator produces 1000 W at 300 rpm or 2000 W at 500 rpm with an electrical efficiency substantially greater than 90%. The generator performs as predicted by the design process.