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PET image resolution is a function of scanner intrinsic resolution and reconstruction method. The purpose of this study was to measure the reconstructed image resolution of the LabPETtrade small animal scanner. A Micro Deluxetrade hot rods phantom was filled with an 18F solution and scanned. The 3D emission data were rebinned using single slice rebinning with various ring differences. Image reconstruction was performed using FBP and variable MLEM iterations in normal and high resolution modes. To estimate the image resolution, the relative peak recovery values were recorded for each hot rod and compared to simulated values of partial volume recovery coefficients obtained by convolving a 2D-Gaussian model with circles of the known rod diameters. FWHM image resolution was shown to improve from 2.3 to 1.1 mm with 20 to 500 MLEM iterations while FBP had a resolution between 1.7-1.8 mm. Initial measurement of the LabPETtrade transverse image resolution is consistent with that expected from a system with individual detector readout. This methodology is applicable to other PET systems and may be particularly useful when using iterative reconstruction.