Magnetoencephalography (MEG) non-invasively provides important information about human brain electrophysiology. The growing use of optically pumped magnetometers (OPM) for MEG, as opposed to fixed arrays of cryogenic sensors, has opened the door for innovation in system design and use cases. For example, cryogenic MEG systems are housed in large shielded rooms to provide sufficient space for the system dewar. Here, we investigate the performance of OPM recordings inside of a cylindrical shield with a 1×2 m2footprint. The efficacy of shielding was measured in terms of field attenuation and isotropy, and the value of post hoc noise reduction algorithms was also investigated. Localization accuracy was quantified for 104 OPM sensors mounted on a fixed helmet array based on simulations and recordings from a bespoke current dipole phantom. Passive shielding attenuated direct current (DC) and power line (60 Hz) fields by approximately 60 dB, and all other frequencies by 80-90 dB. Post hoc noise reduction provided an additional 5-15 dB attenuation. Substantial field anisotropy remained in the volume encompassing the sensor array. The consistency of the anisotropy over months suggests that a field nulling solution could be readily applied. A current dipole phantom generating source activity at an appropriate magnitude for the human brain generated field fluctuations on the order of 0.5-1 pT. Phantom signals were localized with 3 mm localization accuracy and no significant bias in localization was observed, which is in line with performance for cryogenic and OPM MEG systems. This validation of the performance of a small footprint MEG system opens the door for lower cost MEG installations in terms of raw materials and facility space, as well as mobile imaging systems (e.g., truck-based). Such implementations are relevant for global adoption of MEG outside of highly resourced research and clinical institutions.