A new thermal neutron imaging system has been constructed, based on a 20-cm x 17-cm He-3 position-sensitive detector with spatial resolution better than 1 mm. New compact custom-designed position-decoding electronics are employed, as well as high-precision cadmium masks with Modified Uniformly Redundant Array patterns. Fast Fourier Transform algorithms are incorporated into the deconvolution software to provide rapid conversion of shadowgrams into real images. The system demonstrates the principles for locating sources of thermal neutrons by a stand-off technique, as well as visualizing the shapes of nearby sources. The data acquisition time could potentially be reduced two orders of magnitude by building larger detectors.