The steady-state and transient performance of a surface-inset permanent-magnet synchronous generator (PMSG) feeding an isolated load is studied using a coupled-circuit, time-stepping, two-dimensional finite-element analysis. Nonlinearities in the field and electric circuit are taken into consideration and both passive ac load and bridge rectifier dc load operating conditions are analyzed. The main contribution of this paper is the quantitative analysis of voltage and current harmonics, as well as the study of short-circuit performance. The computed results have been verified by experiments on a 2.5 kVA generator.