Dimethyl Ether (DME) is considered as one of the most promising candidates for a substitute for LPG and diesel fuel. We analyzed one-step DME synthesis from syngas in a shell and tube type fixed bed reactor with consideration of the heat and mass transfer between catalyst pellet and reactants gas and effectiveness factor of catalysts together with reactor cooling through reactor wall. Simulation results showed strong effects of pore diffusion. We compared two different arrangements of catalysts, mixture of catalyst pellets (methanol synthesis catalyst and methanol dehydration catalyst) and hybrid catalyst. Hybrid catalyst gave better performance than a mixture of pellets in terms of CO conversion and DME productivity, but more difficulties with reactor temperature control. Use of inert pellets and inter-cooling was also simulated as a means of controlling maximum reactor temperature.