A chromium incorporated mesoporous silicate structured Cr/MCM-41 type catalyst was synthesized following a one-pot hydrothermal route and tested in dehydrogenation of isobutane to isobutene in a Pd membrane reactor. Characterization results of the catalyst proved that it had ordered pore structure with a narrow pore size distribution. This catalyst showed quite high activity for the dehydrogenation of isobutane. Membrane reactor tests performed at 823 K proved the advantages of in-situ removal of produced hydrogen from the reaction zone through the membrane, on isobutene yield. In fact, much higher isobutane conversions than the conversion values predicted from the equilibrium calculations were achieved at this temperature. However, at a higher temperature of 873 K, the Pd membrane itself also showed catalytic activity for the decomposition of isobutane and isobutene. As a result, lower isobutene selectivity values and quite high methane and propene selectivities were observed at this temperature. Cracking reactions also caused coke formation at 873 K, especially at high pressure differences across the membrane (70 kPa). Increase of pressure difference across the membrane caused fast removal of hydrogen from the reaction zone, which facilitated coke formation due to cracking reactions.