Catalytic conversion of syngas to dimethyl ether (DME) is modeled in a microchannel reactor comprised of horizontal groups of rectangular shaped cooling and catalyst washcoated reaction channels involving counter-current flows of air and syngas, respectively. The steady-state model, deviating from the literature-based experimental data in the range of 3-14%, involves two-dimensional conservation of momentum, heat and species mass together with inter-channel heat exchange and reactive transport within porous catalyst layer composed of equivalent mass of uniformly mixed Cu-ZnO/Al2O3 and gamma-Al2O3 catalysts. For the first time in the literature, the benefits of functional and volumetric intensification on the precise regulation of the interplay between exothermic equilibrium synthesis and dehydration reactions are demonstrated. Feeding syngas to the air-cooled microchannel reactor at 508 K, 50 bar, H-2/CO = 2.5 and H-2/CO2 = 10 elevates the inlet temperature by only 9 K which is significantly below similar to 40 K of identically operated packed-bed tubular reactors. Increasing syngas feed temperature from 493 to 508 K elevates CO conversion from 33 to 45%, which eventually shifts DME yield from 2 to 3.6%, respectively. Similar qualitative trends are observed upon pressurizing syngas as well as feeding it at higher flow rates under CO-rich and CO2-lean conditions, all of which fundamentally promote CO hydrogenation, the primary contributor of the exothermic temperature rise that subsequently improves reactor performance under the control of intensified cooling. Even though they promote better regulation of hot-spot formation, the impacts of using thicker walls between the channels and thermally conducive reactor materials remain negligible.