Internal volutes have a constant outer radius, slightly larger than the diffuser exit radius, and the circumferential increase of the cross section is accommodated by a decrease of the inner radius. They allow the design of compact radial compressors and hence are very attractive for turbochargers and high-pressure pipeline compressors, where small housing diameters have a favorable impact on weight and cost. Internal volutes, however, have higher losses and lower pressure rise than external ones, in which the center of the cross sections is located at a larger radius than the diffuser exit. This paper focuses on the improvement of the internal volute performance by taking into account the interaction between the diffuser and the volute. Two alternative configurations with enhanced aerodynamic performance are presented. The first one features a novel, nonaxisymmetric diffuser̸internal volute combination. It demonstrates an increased pressure ratio and lower loss over most of the operating range at all rotational speeds compared with a symmetric diffuser̸internal volute combination. The circumferential pressure distortion at off design operation is slightly larger than in the original configuration with a concentric vaneless diffuser. Alternatively, a parallel-walled diffuser with low-solidity vanes and an internal volute allows a reduction of the unsteady load on the impeller and an improved performance, approaching that of a vaneless concentric diffuser with a large external volute.