In spite of the increasing importance of methanol as a source of hydrogen for fuel cell applications, there does not exist a unified understanding of what factors are important in the design of thermally integrated methanol reforming systems for the production of hydrogen. It is of great significance to understand what causes reactor performance to change and how to control these factors effectively. In this study, numerical simulations were performed with a three-dimensional computational fluid dynamics model to address the fundamental issues associated with the design of a methanol reforming microchannel reactor in a thermally integrated manner. Particular emphasis was placed on the effect of various design parameters on the performance of the reactor. The effects of channel dimensions and catalyst properties on operating temperature, methanol conversion, and hydrogen yield were evaluated. The advantages and limitations of the optimum design of the reactor were analyzed. The results indicated that the thermally integrated design suffers from a fundamental limitation resulting from the flow configuration due to the vertical flow relationship between reacting streams and heat. There exists an optimum steam-to-carbon feed ratio of 1.55:1 in terms of reactor performance. Channel dimensions can significantly affect methanol conversion and hydrogen yield. The type of reforming catalyst is crucial to the performance of the reactor, especially for fuel cell applications. Effective catalyst thermal conductivity is not essential, and excessively thick catalyst washcoats should be avoided.