In this work, methane conversion was carried out over a group VIII metal in a Pd-Ag membrane reactor to produce hydrogen and higher hydrocarbons in a nonoxidative atmosphere. A two-step reaction sequence operated at two different temperatures was adopted to pass around the thermodynamic barrier of low-temperature methane conversion. Methane was first activated as a result of the dissociative deposition over a Ru catalyst, followed by rehydrogenation to form higher hydrocarbons. The use of the Pd-Ag membrane reactor significantly enhanced the methane conversion into hydrogen and carbonaceous species in the first step and the yield of higher hydrocarbons upon rehydrogenation in the second step. The repartition of different carbonaceous species was monitored by temperature-programed surface reaction(TPSR). The effective methane conversion at low temperatures in the membrane reactor favored the formation of C-alpha species which were selective to produce higher hydrocarbons. A C-2+ yield of about 16% was obtained by conducting methane decomposition at 300 degrees C and rehydrogenation at 100-120 degrees C in the Pd-Ag membrane reactor.