A simple two-step microkinetic model for the high-temperature water-gas shift was developed using existing experimental data. This two-step redox model uses only three adjustable parameters, and it is capable of predicting the inhibitory effect Of CO2 on the kinetics of the reaction. It was used to simulate the performance of an adiabatic membrane reactor for the water-gas shift where the membrane is based on Pd. The simulations show that excess steam in the feed is desirable to control the adiabatic temperature rise; a 3:1 ratio of steam to carbon monoxide was found to be near optimum. The simulations further suggest that the rate of reaction is the limiting process in the membrane reactor, not the permeation of hydrogen through the membrane. At 90% hydrogen yield, finding a perfect membrane would only reduce the reactor size by 12%, whereas eliminating the inhibitory effect Of CO2 would reduce the reactor size by 76%.