This study proposes a novel AC vector magnetometer developed using a low-resource magneto-impedance sensor for China’s Feng-Yun meteorological satellite (FY-3E). It was calibrated and characterized to determine its performance parameters. The total weight of the AC vector magnetometer is 51 g (the aluminum box excluded), while the total power consumption is 310 mW. The proposed AC vector magnetometer can detect magnetic field variations in the range of ±1000 nT and noise power spectral density of ⩽ 50 pT/Hz 1/2 @ 1 Hz. Furthermore, the proposed device has a maximum nonlinearity of ⩽ 0.71‰ over the entire range and a nonorthogonality error of 3.07 nT or 0.15% (root mean square). The total dose hardness of the sensor is ⩾ 30 krad (Si). Furthermore, we propose the first survey results of a magnetometer equipped aboard a Chinese FY-3E satellite in a Sun-synchronous orbit. The data revealed that the AC vector magnetometer can detect transient physical signals such as quasistatic field-aligned currents (~50 nT) and waves at the auroral latitudes. These features render the proposed AC vector magnetometer suitable for space-based applications, particularly those involving the study of geomagnetic activity.