This work presents application of palladium-based membranes in a conventional single-type methanol reactor. A novel reactor configuration with hydrogen-permselective Pd and Pd-Ag membrane are proposed. In this configuration the reacting synthesis gas is fed to the shell side of reactor while the high pressure product is routed from recycle stream through tubes of the reactor in a co-current mode with reacting gas. The reacting gas is cooled simultaneously with recycle gas in tube and saturated water in outer shell. The permselective palladium layer on inner tube allows hydrogen to penetrate from the tube side to the reaction side. In this work, the results of two types of novel membrane reactors are compared with a conventional methanol synthesis reactor at identical process conditions. Also the effect of key parameters such as membrane thickness, reaction and tube side pressure, ratio of tube side flow rate to reaction side flow rate on performance of reactor are investigated. The steady-state and quasi-steady-state simulations results show that there are favorable profiles of temperature and methanol mole fraction along the reactor in proposed reactor relative to conventional reactor system. Therefore using this novel configuration in industrial single-type methanol reactor improves methanol production rate. (C) 2008 Elsevier B.V. All rights reserved.