For an endothermic reaction such as steam methane reforming (SMR), temperature gradients in the packed bed can play a significant role in process performance. A reactor design strategy that considers the combination Of tubular packed-bed microreactor (TPBM) operation and catalyst dilution by adsorbent is proposed for enhancement of the SMR process. Simulation studies have been performed with the proposed strategy to quantitatively study the effect of heat transfer limitation and process performance in terms of methane conversion and hydrogen purity. This is carried out using a dynamic 2D pseudohomogeneous model incorporating kinetic and reactor/reaction mechanisms describing the process. The results of these studies show that the temperature,gradient in TPBM is better controlled with less catalyst loading in comparison with traditionally used larger diameter reactors. It is seen that improved heat transfer characteristics of the TPBM combined with the effects of catalyst dilution and adsorption complement each other, and enhanced performance in terms of methane conversion and hydrogen purity is observed. The findings based on this Study give an insight into the performance improvement of the SMR process and show that cost reduction and process miniaturization of fuel processors for fuel cell applications are possible.