With the advances in new inorganic materials and processing techniques, there has been renewed interest in exploiting the benefits of membranes in many industrial applications. Inorganic and composite membranes are being considered as potential candidates for use in membrane-reactor configuration for effectively increasing reaction rate, selectivity and yield of equilibrium limited reactions. To investigate the usefulness of a palladium-ceramic composite membrane in a membrane reactor-separator configuration, we investigated the dehydrogenation of cyclohexane by equilibrium shift. A two-dimensional pseudo-homogeneous reactor model was developed to study the dehydrogenation of cyclohexane by equilibrium shift in a tubular membrane reactor. Radial diffusion was considered to account for the concentration gradient in the radial direction due to permeation through the membrane. For a dehydrogenation reaction, the feed stream to the reaction side contained cyclohexane and argon, while the separation side used argon as the sweep gas. Equilibrium conversion for dehydrogenation of cyclohexane is 18.7%. The present study showed that 100% conversion could be achieved by equilibrium shift using Pd-ceramic membrane reactor. For a feed containing cyclohexane and argon of 1.64 x 10(-6) and 1.0 x 10(-3) mol/s, over 98% conversion could be readily achieved.