The characteristics of a catalytic heat exchanger which can integrate heat generation and heat exchange were numerically investigated. The catalytic heat exchanger was modeled in a three-dimensional, steady state and laminar flow system, including the surface reaction on catalytic fins. The surface reaction was modeled with one-step reaction incorporating the diffusion effect on the catalysts. The surface reaction on catalytic fins was significantly influenced by the heat transfer rate in fin tubes. In order to achieve both the complete conversion of the mixture and the efficient recovery of heat generated, the results suggest that the surface reaction should be completed in the first stage of the catalytic heat exchanger and the second stage should function only as a heat recovery. The effects of the catalytic fill configuration on the catalytic combustion performance were also investigated at a variety of operating conditions. (C) 2003 Elsevier Science B.V. All rights reserved.