A steam generator system for a pressurized water reactor which employs an external to containment steam drum and recirculation loop piping. The steam generator system changes the arrangement of a typical pressurized water reactor recirculation steam generator by relocating the functions of steam separation and feedwater preheating outside of the reactor coolant system. The steam generator system and thermal hydraulic conditions are selected in order to minimize the size of the steam generator heat exchanger component volume inside of the containment. The external steam drum component can be isolated in accident conditions when desired and is used as a source of secondary fluid inventory for improved decay heat removal capability and tolerance for loss of feedwater events. Thus, the steam generator component volume inside of the containment is reduced and the amount of maintenance required for the reactor coolant system components are similarly reduced.