Abstract Stainless steel-supported composite membranes with the Knudsen-dominated permeation behavior were synthesized via the dipping–rolling–freezing–fast drying (DRFF) and soaking–rolling–freezing–fast drying (SRFF) method. A dimethyl ether (DME) steam reforming was performed in a membrane reactor using the stainless steel-supported Knudsen membrane (SKM) with remarkably high permeability. The Knudsen membrane with high permeability was used to improve DME conversion and hydrogen recovery. Compared to a conventional reactor, the DME conversion was improved up to 48% and the hydrogen recovery was 37–38% in the temperature range of 250–450 °C. Moreover, the DME steam reforming-membrane reactor was combined with water–gas shift (WGS) reaction in the permeate side of the membrane reactor to obtain high CO removal efficiency. As a result, the CO concentrations was significantly reduced to below 20 ppm in the permeate side of the membrane reactor via the WGS reaction in the temperature range of 300–450 °C.