Dissolved oxygen in water at parts per million (ppm) concentration range was reduced to a level less than 1.5 parts per billion (ppb) using a novel membrane reactor. The membrane reactor used was a polypropylene microporous hollow fibre membrane module packed with a palladium catalyst in the void space of the shell side. The saturated oxygen in water flowing in the shell side of the reactor was removed by purified hydrogen flowing in the fibre lumen. The hydrogen gas acted as both a reducing agent and a purge gas. Experimental results reveal that the rate of dissolved oxygen removal for both physical stripping and chemical reaction was controlled by the liquid film adjacent to the hollow fibre membrane and catalyst particles in the shell side. The removal of the dissolved oxygen was achieved by both the physical stripping and the chemical reaction at low catalyst loadings, whereas the chemical reaction became the dominant step at high catalyst loadings. A mass transfer correlation developed in this paper may be used in conjunction with available correlations for the design of a membrane deoxygenation reactor in the production of ultrapure water.