The operation of a compact, small scale, chemically pumped iodine atom laser is described. More than 40% extractable power efficiency has been achieved in a transverse-flow apparatus. 5W of CW laser emission at 1315 nm has been obtained via energy transfer from chemically generated O2(1Δ) to I atoms in a 10 × 1 cm2 rectangular flow duct. Simple construction materials, safely handled chemicals and a medium size vacuum pump were used for fabricating and operating the laser. The importance of minimizing quenching of excited species by collision with water molecules or with the wall is demonstrated. The chemical generator has also been used for studying the reaction of 02(1Δ) with Pb atoms. Both excited Pb atoms and excited PbO molecules have been observed and possible excitation mechanisms have been investigated.