An inner-preheating transpiring-wall reactor with a hydrothermal flame was designed and tested to avoid plugging in the preheating section. Hot water was used as auxiliary heating fluid to preheat the fuel to the ignition temperature. This work focused on the flame characteristics (i.e., the ignition and extinction processes, the ignition and extinction temperatures) inside the inner-preheating transpiring-wall reactor. The result shows that higher fuel concentrations and fuel flows permit lower ignition temperatures. The results of the nozzle configuration experiments show that lower velocities provide resistance to extinction.