We have proposed a new low-IF transceiver architecture to simultaneously achieve both a small chip area and good minimum input sensitivity. The distinctive point of the receiver architecture is that we replace the complicated high-order analog filter for channel selection with the combination of a simple low-order analog filter and a sharp digital band-pass filter. We also proposed a high-speed convergence AGC (automatic gain controller) and a demodulation block to realize the proposed digital architecture. For the transceiver, we further reduce the chip area by applying a new form of direct modulation for the VCO. Since conventional VCO direct modulation tends to suffer from variation of the modulation index with frequency, we have developed a new compensation technique that minimizes this variation, and designed the low-phase noise VCO with a new biasing method to achieve large PSRR (power-supply rejection ratio) for oscillation frequency. The test chip was fabricated in 0.35-µm BiCMOS. The chip size was 3 3 mm2; this very small area was realized by the advantages of the proposed transceiver architecture. The transceiver also achieved good minimum input sensitivity of -85 dBm and showed interference performance that satisfied the requirements of the Bluetooth standard.