The first neutron spectrometer of ASDEX Upgrade (AUG) was installed in November 2008. It is a compact neutron spectrometer (CNS) based on a BC501A liquid scintillating detector, which can simultaneously measure 2.45-MeV and 14-MeV neutrons emitted from deuterium (D) plasmas and γ radiation. The scintillating detector is coupled to a digital pulse shape discrimination data acquisition (DPSD) system capable of count rates up to 106 s−1. The DPSD system can operate in acquisition and processing mode. With the latter n-γ discrimination is performed off-line based on the two-gate method. The paper describes the tests of the CNS and its installation at AUG. The neutron emission from the D plasma measured during a discharge with high auxiliary heating power was used to validate the CNS performance. The study of the optimal settings for the DPSD data processing to maximize the n-γ discrimination capability of the CNS is reported. The CNS measured both 2.45-MeV and 14-MeV neutrons emitted in AUG D plasmas with a maximum count rate of 5.4 ×105 s−1 (>10 times higher than similar spectrometers previously achieved) with an efficiency of 9.3 × 10−10 events per AUG neutron.