A hollow cathode with a modular design has been developed to assist with laboratory testing of plasmabased thrusters for satellite applications. This novel modular design includes interchangeable components for varying the geometry and tailoring the configuration to specific applications, as well as easing the replacement of individual components in the case of damage. The modular hollow cathode also presents unconventional design features aimed at improving the heating efficiency: the heater is in direct contact with the emitter and the keeper is not in physical contact with the cathode base. The modular hollow cathode development has been based on a combination of theoretical modelling and experimental testing. The influence of the novel mechanical assembly has been investigated by characterising the operational envelope at different propellant mass flow rates for xenon and krypton. The modular hollow cathode has demonstrated stable operation by sustaining discharge currents between 0.5 and 4 A at different conditions. Finally, the cathode has been coupled with a Hall-type plasma thruster operating in the 0.3–2.5 A anode current range. This paper outlines development, experimental validation of this peculiar mechanical cathode configuration, covering plasma and thermal modelling, standalone testing, and coupled Hall-type thruster operation.