A millimeter-scale compact multifunctional reactor has been developed and tested for the selective oxidation of benzyl alcohol, using molecular oxygen as the oxidant. The reactor consists of parallel reaction channels that are packed with catalyst particles. Within the structured assembly are an integrated heat-exchange system, a gas/liquid mixing zone, and a provision for reactant injection. Experiments were performed in square channels that are 10 cm long with a cross-sectional area of 9 mm2. These were packed either with Ru/Al2O3 (0.9 wt % of Ru) or Ru/TiO2 (2 wt % of Rt) catalysts. Hydrodynamic characteristics of the system were evaluated to establish pressure drop and effectiveness of gas/liquid mixing and to confirm the nature of the gas−liquid flow regime. Operating the reactor at 8 bar and 388 K with a liquid flow L = 3.2 kg m-2 s-1 and gas flows G > 2.5 × 10-2 kg m-2 s-1, it was shown that, even in a short 10 cm length of channel, a product yield of up to 55% (with 99.7% selectivity) could be obtained. Although the adiabatic temperature rise at 55% yield is estimated to be ca. 180 K, the reactor was shown to operate isothermally, because of the efficient removal of heat through the integrated micro-heat-exchange system. It was concluded that this structured design of a reactor showed considerable promise for the development of cleaner oxidation processes.