The Institute of Plasma Physics and Laser Microfusion's (IPPLM) Hall effect thruster (Krypton Large IMpulse Thruster, KLIMT) is a 500 W class plasma engine with a mean diameter of discharge channel of 42 mm. KLIMT was developed within ESA/PECS project aiming to provide relatively small thruster for satellites that would be able to effectively operate with krypton propellant. Being several times less expensive than xenon, which is regarded as a propellant of choice for electric propulsion of electrostatic type, krypton since years has been suggested as an attractive alternative. In this paper, a design as well as performance tests of the laboratory model of KLIMT are discussed. It is shown that precise adjustment of magnetic field topography results in the stable operation of the thruster in wide range of operating conditions providing similar thrust and specific impulse production for both propellants. Maximum thrust produced with the use of xenon and krypton reached about 16–17 mN for mass flow rate of 1.15–1.2 mg/s resulting in specific impulse in the range of 1300–1500 s (13–15 km/s). However, for krypton the anode efficiency drops by ~10% in comparison with xenon. For krypton plasma beam divergence as measured by an average half-angle with respect to the beam axis was found to remain within the range of 19–23° for the whole set of the examined operating conditions. The reported characteristics are reasonable for Hall thruster of the discussed size and power.