In the field of ship propulsion, highly reliable propulsion motor is one of the key factors for the stable operation of the drive system. This paper proposes a new modular stator low‐speed high‐torque fault‐tolerant permanent magnet motor (MCS‐PMFTSM) for the direct‐drive ship propulsion system. The unequal‐span winding is used for enhanced fault‐tolerant as well as modular operation of the motor. Each module is isolated electrically and mechanically, while the maintenance procedure is greatly simplified by the structure that uses external radiation installation. Introducing the new structure and operating principle of the MCS‐PMFTSM, the basic size equation of the motor is derived followed by the analysis for the selection of the number of poles and slots. The rotor structure of the motor is then optimized using the genetic algorithm. The finite element method is used to analyze the motor performance under normal and various fault‐tolerant conditions. In addition, the electromagnetic vibration of the proposed motor is also examined under different operating conditions. Finally, a 12 kW 100 r/min 3 × 3 modular prototype is developed to experimentally validate the excellent performance of the proposed motor under both normal and fault‐tolerant operating conditions. © 2021 Institute of Electrical Engineers of Japan. Published by Wiley Periodicals LLC.