Coupling reaction and separation in a membrane reactor improves the reactor efficiency and reduces purification cost in the next stages. In this work a novel reactor consisting two membrane layers has been proposed for simultaneous hydrogen permeation to reaction zone and water vapor removal from reaction zone in the methanol synthesis reactor. In this configuration conventional methanol reactor is supported by a Pd/Ag membrane layer for hydrogen permeation and alumina-silica composite membrane layer for water vapor removal from reaction zone. In this reactor syngas is fed to the reaction zone that is surrounded with hydrogen-permselective membrane tube. The water vapor-permselective membrane tube is placed in the reaction zone. A steady state heterogeneous one-dimensional mathematical model is developed for simulation of the proposed reactor. To verify the accuracy of the model, simulation results of the conventional reactor is compared with the available plant data. The membrane fixed bed reactor benefits are higher methanol production rate, higher quality of outlet product and consequently lower cost in product purification stage. This configuration has enhanced the methanol yield by 10.02% compared with industrial reactor. Experimental proof-of-concept is needed to establish the safe operation of the proposed configuration. (C) 2011 The Institution of Chemical Engineers. Published by Elsevier B.V. All rights reserved.