Purpose: Decreasing energy demand due to improved building standards requires the development of new biomass combustion technologies to be able to provide individual biomass heating solutions. The purpose of this paper is, therefore, the development of a pellet water heating stove with minimal emission at high thermal efficiency. Design/methodology/approach: The single components of a 10 kW water heating pellet stove are analysed and partly redesigned considering the latest scientific findings and experimental know-how in combustion engineering. The outcome of this development is a 12 kW prototype which is subsequently down-scaled to a 6 kW prototype. Finally, the results of the development are evaluated by testing of an accredited institute. Findings: Based on an existing pellet water heating stove, the total excess air ratio was reduced, a strict air staging was implemented and the fuel supply was homogenized. All three measures improved the operating performance regarding emissions and thermal efficiency. The evaluation of the development process showed that the CO emissions are reduced by over 90 per cent during full load and by 30-60 per cent during minimum load conditions. Emissions of particulate matter are reduced by 70 per cent and the thermal efficiency increased to 95 per cent. Originality/value: The result represents a new state of technology in this sector for minimal emissions and maximal thermal efficiency, which surpasses the directives of the Eco label "UZ37" in Austria and "Blauer Engel" in Germany, which are amongst the most stringent performance requirements in the European Union. Hence this design possesses a high potential as heating solution for low and passive energy houses.