Pd-Ag/ceramic composite membrane, prepared by the improved electroless plating, was characterized. It exhibited higher hydrogen permeating flux (0.759 mol s(-1) m(-2) at 773 K, DeltaP = 1.936 atm) and the separation factor of hydrogen to nitrogen or argon was close to infinite. Effects of various operating parameters on the catalytic dehydrogenation of isobutane in the membrane reactor, such as reaction temperature and pressure, space velocity of feed gas, flow rate of purge gas, and molar ratio of nitrogen to isobutane in feed gas, on the conversion of isobutane were investigated. The conversion of isobutane (50.5% at 723 K) in the membrane reactor exceeded the equilibrium conversion (18.8%) and that (15.5%) in the fixed-bed reactor. Maintaining a certain partial pressure of hydrogen in the reaction side of the membrane reactor is favorable to reduce the deactivation rate of catalyst and membrane by carbon deposition. (C) 2003 Elsevier Science B.V. All rights reserved.