A coincidence detection system between 350μm pitch pixelated Cadmium Zinc Telluride (CdZnTe) detector and a LSO-based Inveon PET detector was set up to investigate the performance of using highly pixelated CdZnTe detector as a PET insert for sub-500μm resolution PET imaging applications. 20x20x5mm̂3 CdZnTe substrate was contacted with 350μm pitch pixels (250μm anode pixels with 100μm gap) and coplanar cathode. Based on the charge sharing measurement of the 350μm CdZnTe detector, we analyzed how charge sharing events from CdZnTe detector affect the PET image resolution. We recorded coincidence events between a central CdZnTe pixel and an Inveon LSO detector to image a NEMA NU4 Na-22 point source, which is 250μm in diameter and embedded in an acrylic cube. To interpolate the position of the charge sharing events between two neighbor pixels, we divided such events into five regions based on the ratio of signal amplitude of central pixel and neighbor pixels, and then reconstructed the PET image using events from different regions individually. Results show that the PET image resolution of coincidence events using the CdZnTe single-pixel photopeak events is 590μm FWHM, while the image resolution was decreased to 640μm FWHM if we included the charge sharing events. By interpolating the location of the charge sharing events, the reconstructed PET image resolution was improved from 640μm to 560μm. If we compensated the effective source dimension plus positron range, the image resolution was improved to 460μm FWHM. In a conclusion, the image resolution of an animal PET scanner can be improved to sub-500μm FWHM if we use 350μm pitch pixelated CdZnTe detector as a PET insert and integrate such device into the PET scanner.