This paper presents a new transport theory suitable for the study of energetic particles in the magnetospheric environment. A Fokker-Planck diffusion equation governing the variation of the particle distribution function, along with its isotropic and bounce average approximations, is established in the phase space of location and momentum, which is similar to how cosmic rays are treated by the heliospheric community. The equation includes essentially all the particle transport mechanisms: streaming, convection, drift, adiabatic energy change, acceleration by parallel electric field, focusing, and diffusions in location, momentum, and pitch angle. All the coefficients of the equation are directly linked to plasma and magnetic configurations including electromagnetic fluctuations. The theory can form a base for developing full-scale numerical models of energetic particle transport including acceleration in the magnetosphere. Unlike the conventional theory using canonical variables which is only applicable to the radiation belt of the inner magnetosphere, this theory includes the effects of nonuniform magnetospheric convection and thus is valid for the entire magnetosphere. The derivation of the transport equation has identified some important particle transport mechanisms that have not received careful study by the magnetospheric community. It is found that the compression of magnetospheric plasma can play a significant role in particle acceleration and trapping. The compressional acceleration is the first-order particle acceleration mechanism, very similar to particle acceleration at shock waves in other space plasma environments. This acceleration mechanism is operable to both electrons and ions. A model map of magnetospheric convection flow shows that the compressional particle acceleration is a large-scale phenomenon and it is the strongest in the near-Earth nightside plasma sheet. Magnetospheric compression can also drive particles toward the 90¿ equatorial pitch angle, which is ideal for trapping them in the geomagnetic field.