We are developing a detector system for locating environmental radiation sources. The design emphasizes compact size (ideally hand-held), wide field of view and high detection efficiency, and uses cadmium-zinc-telluride (CZT) detectors and electronic collimation via Compton-scatter detection. The detector design is a 6-sided box with a primary scatter detector on one end. GEANT4 simulations, allowing variations of detector parameters and source energies/locations, provided performance estimates. A partial prototype, using 16x16-pixel 38x38x5-mm3 CZT detectors, was developed and tested. Two methods to calculate source direction in real-time from the Compton scatter data were evaluated: (1) filtered backprojection of cones onto a sphere; (2) intersection with the sphere of bounding boxes circumscribed around the cones. Simulation results of the 6-sided box with the current CZT modules indicated 1-5% of incident gamma rays produce valid direction angles, with an angular resolution of ~15°. The directional algorithms allowed a FOV (directional error <10°) of approximately ±60°. The direction algorithms converge on a source direction estimate in as few as 100 detected events. With improvements in detector energy and spatial resolution, reasonable performance seems achievable for a range of radioisotopes, e.g., from Am-241 through Co-60.