The processing of high density liquid hydrocarbon fuels appears to be the most promising method of supplying a hydrogen stream for feeding portable fuel cells. Furthermore, microchemical systems are a strong enabling aspect of compact fuel processors due to their advantageous heat and mass transport and inherent compactness. However, a number of crucial challenges exist for the realization of practical fuel processors. In this article, these challenges are addressed, and two examples are shown of how the challenges can be attacked in the context of implementation of microchemical systems. The examples involve (a) appropriate measurement of kinetics in microchannel-catalyst systems with preferential oxidation of carbon monoxide as a model, and (b) thermal integration of reactor components with a methanol steam reformer as a model.