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Permanent-magnet generators (PMGs) have rapidly become important in renewable energy systems, portable and standby generating systems, and in many new applications in industrial, utility, aerospace, and automotive sectors. While there has been some discussion of “fault tolerance” and fault testing of an 8-MW machine has recently been reported , understanding the behavior of faulted PMGs remains far from complete. This paper addresses the important case of the sudden short circuit applied to large PMG machines. It explains key differences in short-circuit behavior between the PMG and wound-field generator. The subtransient reactances and time constants of the PMG are calculated by both analytical and finite-element methods and applied to the classical circuit-theory simulation of the short-circuit fault. The finite-element method is also used to assess in detail the risk of loss of magnetization in the magnets. The complexity of the transient magnetic field requires transient nonlinear circuit-coupled finite-element analysis in three dimensions with voltage-source excitation. This paper concludes with a review of the methods of calculation and a discussion of implications for future design and application of the PMG, including factors relevant to the application of standard tests and specifications.