The contra-rotating machine (CRM) is a considerable competitive choice for the contra-rotating propeller (CRP) due to its advantages of compact volume and high efficiency. However, the conventional contra-rotating machine has rotating windings, which brings several problems like poor reliability, difficult dynamic balance and heat dissipation. To solve above problems, this paper proposes an interior-modulating-rotor transverse-dislocated brushless contra-rotating machine (IMR-TDBCRM) based on three-dimensional (3-D) magnetic-field modulation principle. First, the topology of the proposed IMR-TDBCRM is introduced. Then, the working mechanism and operating characteristics are investigated. Finally, the electromagnetic performances of the IMR-TDBCRM including airgap magnetic field, no-load back EMF, and torques, are analyzed by 3-D FEA.