A new configuration of a membrane reactor-separator for homogeneous catalysis is described that is designed not only to encapsulate the catalyst solution, but to simultaneously separate the product from reactant. It is composed of a porous support layer that is impregnated partially or completely with the liquid-phase catalyst and is sandwiched between two different membranes. Membrane 1 is readily permeable to the reactant but not to the product, whereas membrane 2 allows free permeation of both the reactant and the product while encapsulating the catalyst solution. The performance of a differential stirred-cell membrane reactor-separator was theoretically investigated for the case of a first-order irreversible reaction. The extent of product separation was studied as a function of membrane permselectivity for reactant and product, the difference in resistance of membrane and catalyst layer, liquid loading of the catalyst layer, and the sweep fluid flow rate. The efficacy of the device was experimentally demonstrated using ethylene hydroformylation with hydridocarbonyltris (triphenyl phosphine) Rh(I) catalyst dissolved in dioctyl phthalate solvent.