Given the competitive effect of water on DME productivity, paraffin formation and catalyst deactivation rate, a steady state investigation of water effect will be insufficient. Besides, temperature plays an important role in catalyst lifetime and formation of by-products in the direct synthesis of dimethyl ether. The main purpose of this study is to conduct a steady state and dynamic analysis of two opposite effects of the formatted water on the performance and temperature profiles of the two types of reactors. These opposite effects include 1- unfavourable attenuation of methanol synthesis, and 2- favourable attenuation of catalyst deactivation. In this respect, a multi-objective optimization problem with two new objective functions that offer a trade-off is proposed: maximization of the DME production rate and minimization of the slope of catalyst deactivation rate at time zero by optimizing the inlet, shell temperature and average water removal percentage. The behaviour of two types of reactors, a conventional shell-and-tube reactor and a thermally efficient shell and double tube reactor with/without inter stage water removal, are investigated. The steady-state and dynamic one-dimensional pseudo homogenous models are developed to solve mass, energy and momentum equations in order to investigate the steady state and dynamic behaviour of reactors. It is shown that although higher average water removal percentage would lead to increased DME production, it also leads to escalated catalyst deactivation rate, paraffin and hot spot inside the reactors. Moreover, the thermally efficient double-shell and tube reactor with intermediate water removal is shown to be superior to the conventional shell-and-tube reactor, yielding better temperature control (hot spot and temperature runaway) and higher DME productivity due to enhanced DME selectivity.