We study a nonlinear mechanism for the excitation of kinetic Alfven waves (KAWs) by fast magneto-acoustic waves (FWs) in the solar atmosphere. Our focus is on the excitation of KAWs that have very small wavelengths in the direction perpendicular to the background magnetic field. Because of their small perpendicular length scales, these waves are very efficient in the energy exchange with plasmas and other waves. We show that the nonlinear coupling of the energy of the finite-amplitude FWs to the small-scale KAWs can be much faster than other dissipation mechanisms for fast wave, such as electron viscous damping, Landau damping, and modulational instability. The nonlinear damping of the FWs due to decay FW = KAW + KAW places a limit on the amplitude of the magnetic field in the fast waves in the solar corona and solar-wind at the level B/B-0 similar to 10(-2). In turn, the nonlinearly excited small-scale KAWs undergo strong dissipation due to resistive or Landau damping and can provide coronal and solar-wind heating. The transient coronal heating observed by Yohkoh and SOHO may be produced by the kinetic Alfven waves that are excited by parametric decay of fast waves propagating from the reconnection sites.