Following a successful development of a hollow fibre membrane reactor (HFMR-I) [1], a highly compact multifunctional Pd/alumina hollow fibre membrane reactor (HFMR-II) was further developed and applied to the catalytic dehydrogenation of propane to propene. The developed HFMR-II consists of a thin and defect-free Pd membrane coated directly onto the outer surface of an alumina hollow fibre substrate with a unique asymmetric pore structure, i.e. a sponge-like outer layer and a finger-like inner layer where Pt (1 wt.%)/SBA-15 catalyst is deposited. Benefiting from this novel design, the functionalized alumina hollow fibre substrates with a surface area/volume value of up to 1918.4 m(2)/m(3) possess a catalyst surface area of 31.8 m(2)/g, which is significantly higher than that of the HFMR-I in which Pt (0.5 wt.%)/-gamma-Al2O3 catalyst is deposited. In contrast with a conventional fixed bed reactor (FOR), greater propene selectivity and a one order of magnitude higher space-time yield (STY) have been achieved by using the HFMR-II for propane dehydrogenation. Although the process controlling step in the HFMR-II is believed to be the catalytic reaction, as a consequence of catalyst deactivation due to coke-formation, the advantages of HFMR-II, such as easy catalyst deposition and high catalytic surface area for catalytic reactions, are promising for other catalytic reactions with less coking problems, such as the water-gas-shift (WGS) reaction and steam reforming (SR) etc. (C) 2010 Elsevier B.V. All rights reserved.