Homopolar inductor machine (HIM) has caught much attention in the field of flywheel energy storage system (FESS) due to its merits of robust rotor, brushless exciting, and high reliability. Compared with permanent magnet HIM (PM-HIM), the HIM with field winding (FW-HIM) can effectively eliminate the idling loss caused by the no-load magnetic field by cutting off the excitation current, while the charge/discharge efficiency of the HIM would be decreased due to the copper loss of field winding. To address this contradiction, a novel PM-HIM with a mechanical flux modulator (MFM-HIM) is proposed to achieve low idling loss and high charge/discharge efficiency. First, the special structure and operation principle of the MFM-HIM are investigated. Afterwards, the characteristic of the equivalent magnetic circuit of the MFM-HIM is analyzed and the key structure parameters of it are derived and optimized. Moreover, the electromagnetic performance indexes of the MFM-HIM, including back electromotive force, flux weakening ability, losses, etc. are fully analyzed. Finally, a prototype of the MFM-HIM is designed, manufactured, and tested. Experiment results confirm those obtained by simulations. Results show that the proposed MFM-HIM inherits the merits of high charge/discharge efficiency of PM-HIM and almost no idling electromagnetic loss of FW-HIM. The MFM-HIM could be a promising candidate for the application of FESS.