The micro-sputtering apparatus, developed by the authors and based on the discharge sputtering with Penning ionization gauge type electrode arrangement, can form a minute thin film and can etch locally a substrate with any area in μm-to-mm square range. In a former apparatus of outer-magnet type developed by the authors, a substrate must be set in a vacuum chamber. Recently some new applications required to make deposition or etching on an arbitrary position of a large substrate or on a curved surfaces of fishes and shells. In this study, an inner-magnet type apparatus is developed anew in response to such requests. Design procedure of magnetic circuits is given. A newly designed apparatus is equipped with a discharge space surrounded by a soft iron envelope so as to form a magnetic circuit of 64 mm in outer diameter, 60 mm in inner diameter and 31 mm in height, in which an anode, target cathodes and magnets are installed. With the apparatus, the deposition or etching beam is drawn out from the discharge space through a hole of 6 mm diameter. When the hole is applied to a substrate aided by a sealing material, a thin film can be formed on the substrate or the substrate surface can be etched locally. The deposition rates of thin films on a glass substrate were 15 nm/min for Au and 22 nm/min for Ag, while the etching rates were 65 nm/min for a synthetic diamond and much greater for semiconducting materials, for example, 340 nm/min for a Si wafer and 1000 nm/min for a GaAs wafer.