FRM II is based on a single fuel element, cooled with light water and surrounded by heavy water in a large moderator tank, where a high flux of thermal neutrons builds up. FRM II was developed as a highly efficient neutron source optimised primarily for performing beam tube experiments, but also providing excellent facilities for sample irradiation. For this reason, the reactor was designed to provide a high, spectrally pure thermal neutron flux density in a large volume outside the reactor core, which is accessible for experimental use.

The meet the requirements of modern experiments of research with neutrons a research reactor's characteristics must be:

1. High thermal neutron flux density inside the moderator tank,
2. Big volume to use with high thermal neutron flux for beam tubes and irradiation facilities,
3. high spectral purity of the neutrons' energy distribution (less background radiation).

FRM II meets these requirements by means of the compact core, a single fuel element, cooled with light water. The compact reactor core is in the centre of a D₂O moderator tank with 2,5m in diameter and 2,5m high.