A direct-drive robotic manipulator (CMU DD Arm) is being developed at Carnegie-Mellon University. This paper describes the design concept and theory of this new mechanical arm based on the direct-drive method using rare-earth DC torque motors. Because these motors have high torque, light weight and compact size, we can construct robots with far better performance than those presently available. For example, we can eliminate all the transmission mechanisms between the motors and their loads, such as reducers and chain belts, and construct a simple mechanism (direct-drive) where the arm links are directly coupled to the motor rotors and stators. This elimination can lead to excellent performance: no backlash, low fraction, low inertia, low compliance and high reliability.