A concept of DT-fusion neutron source (FNS) with the neutron yield higher than 1018 neutrons per second is under designe in Russia. Such a FNS is of interest for many applications: (i) basic and applied research (neutron scattering, etc); (ii) testing the structural materials for fusion reactors; (iii) control of sub-critical nuclear systems and (iv) nuclear waste processing (including transmutation of minor actinides). This paper describes of fuel cycle concept of a compact fusion neutron source based on a small spherical tokamak (FNS-ST) with a MW range of DT fusion power and considers the key physics issues of this device. The major and minor radii are ∼0.5 and ∼0.3m, magnetic field ∼1.5 T, heating power less than 15MW and plasma current 1–2 MA. The system provides the fuel mixture with equal fractions of D and T (D:T = 1:1) for all FNS technology systems.