Among the most important specifications for microwave filters are selectivity, bandwidth, passband insertion loss and physical size. To design a narrowband filter, the unloaded Q-factor of the resonator must be increased if we are to maintain a fixed passband insertion loss. However the Q-factor is proportional to volume of a microwave resonator filter. Thus, a highly selective, narrowband, and low loss filter will require a significant physical volume. This paper presents a novel cavity design of a stepped-impedance dual-mode coaxial microwave filter based on TEM mode of propagation. A brief theory together with design procedures is shown. In contrast to conventional combline based single mode filter, the proposed filter will be proven to be able to exhibit two resonances per unit structure. Therefore, the number of the resonators required is reduced to half. The simulated result clearly shows two resonances in the passband for one physical structure, hence producing dual-mode response. This filter is a suitable candidate for compact base station where the small and compact size of filter is highly concerned. © 2013 IEEE.