The design and performance of the first vacuum ultraviolet (VUV) laser-based angle-resolved photoemission (ARPES) system are described. The VUV laser with a photon energy of 6.994 eV and bandwidth of 0.26 meV is achieved from the second harmonic generation using a novel nonlinear optical crystal KBe2BO3F2. The new VUV laser-based ARPES system exhibits superior performance, including superhigh energy resolution better than 1 meV, high momentum resolution, superhigh photon flux, and much enhanced bulk sensitivity, which are demonstrated from measurements on a typical Bi2Sr2CaCu2O8 high temperature superconductor. Issues and further development related to the VUV laser-based photoemission technique are discussed.