A novel concept of the staged-separation membrane reactor is introduced in this paper. This new reactor design retains the advantage of regular membrane reactors for achieving super-equilibrium conversion while reaction and membrane separation are carried out in two separate units. This obviates the restriction of the regular membrane reactor where membrane separation and reaction occur in the same unit, and so must be operated under the same conditions. With the membranes outside the reactor for the staged-separation membrane reactor, it becomes possible to operate under more favorable conditions for both reaction and membrane separation to achieve better overall performance. Steam methane reforming for hydrogen production was used as the example to elucidate the concept of the staged-separation membrane reactor. The performance of the staged-separation membrane reactor was compared with that of a regular membrane reactor and a traditional reformer together with an ex situ membrane purifier for hydrogen production via steam methane reforming. The staged-separation membrane reactor performed much better. The allocation of membrane area to the two membrane modules was optimized. The effects of temperature, steam-to-carbon ratio and pressure for reformer modules and membrane area for membrane modules were simulated for various cases. (C) 2007 Elsevier B.V. All rights reserved.