Abstract Exoskeleton robots require powerful and lightweight power supplies. Because of its high power-to-mass ratio and fast response, hydraulic systems can meet the requirement for locomotion robots. In this paper, a novel compact hydraulic power unit (CHPU) is proposed. A two-stroke IC engine, with a rated power of 2.4 kW at 13,000 rpm, is used as the prime mover. The engine drives a high speed (10,000 rpm) piston pump to allow the engine to operate at high power. A spring loaded reservoir has been developed to prevent the pump intake from cavitation and contamination. The payload flow rate is indirectly estimated using the displacements of the actuator. A Ragone plot analysis shows that the CHPU can maintain a high specific power over a long duration. A dynamic model for the CHPU has been developed based upon simplified engine operating characteristics and a set of experimentally identified parameters. A prototype of the CHPU has been constructed with a rated power of 1.45 kW and a weight of 16.6 kg. Experimental testing of the prototype confirms the dynamic model and the output capacity of the CHPU.