A new Finite Element by Source method (FES) is developed by the authors. FES which has flexible geometrical shape is composed by nodes distributed on the element boundary and sources distributed out of the element boundary. The relation between the density of sources and the boundary condition at the nodes is obtained from the combination of the fundamental solution such as Kelvin's solution for static elastic structural problems. According to this procedure, we can perform numerical analysis dealing with complex configured structures such as ship with further less mesh comparing to the traditional Finite Element Method and we can obtain more accurate results. This paper describes a fundamental theory and formulation of FES. Some examples for static elastic structural problem using 2D plane stress FES and 3D solid FES are also presented in this paper comparing to the theoretical solution or numerical results by using traditional FEM.