Abstract: Microdischarges are an important type of plasma discharge that possess several unique characteristics, such as the presence of a stable glow discharge, high plasma density and intense excimer radiation, leading to several potential applications. The intense and controllable gas heating within the extremely small dimensions of microdischarges has been exploited in microthruster technologies by incorporating a micro-nozzle to generate the thrust. This kind of microthruster has a significantly improved specific impulse performance compared to conventional cold gas thrusters, and can meet the requirements arising from the emerging development and application of micro-spacecraft. In this paper, we performed a self-consistent 2D particle-in-cell simulation, with a Monte Carlo collision model, of a microdischarge operating in a prototype micro-plasma thruster with a hollow cylinder geometry and a divergent micro-nozzle. The model takes into account the thermionic electron emission including the Schottky effect, the secondary electron emission due to cathode bombardment by the plasma ions, several different collision processes, and a non-uniform argon background gas density in the cathode-anode gap. Results in the high-pressure (several hundreds of Torr), high-current (mA) operating regime showing the behavior of the plasma density, potential distribution, and energy flux towards the hollow cathode and anode are presented and discussed. In addition, the results of simulations showing the effect of different argon gas pressures, cathode material work function and discharge voltage on the operation of the microdischarge thruster are presented. Our calculated properties are compared with experimental data under similar conditions and qualitative and quantitative agreements are reached.