Proton-exchange fuel cells, also known as Polymer Electrolyte (Membrane) Fuel Cells ("PEM" or "PEMFC") are low temperature fuel cells which are being developed for transport applications as well as for stationary applications. In this fuel cell, hydrogen is split at the anode (which in practice is a thin layer of catalyst on the polymer membrane's surface) into protons, that travel across the membrane to the cathode (similar or identical to the anode layer) where they combine with oxygen and electrons (which have travelled to the cathode from the anode via an external "load" circuit) to create water, the cells only product when using pure hydrogen. To function the membrane must conduct hydrogen ions (protons) but not water molecules or electrons as this would in effect "short circuit" the fuel cell. The oldest and most commonly used membrane is Nafion by Du Pont.

Unfortunately, while the splitting of the hydrogen molecule is relatively easy, splitting the stronger oxygen molecule is more difficult, and this causes significant losses. Another significant source of losses is the resistance of the membrane to proton flow, which is minimized by making it as thin as possible.

The PEMFC is a prime candidate for vehicle and other mobile applications of all sizes down to mobile phones, because of its compactness. However, the water management is crucial to performance: too much water will flood the membrane, too little will dry it; in both cases, power output will drop. Water management is a very difficult subject in PEM systems. Furthermore, the platinum catalyst on the membrane is easily poisoned by carbon monoxide and the membrane is sensitive to things like metal ions (which can be introduced by corrosion of metallic bipolar plates).

PEM systems that use reformed methanol were proposed, as in Daimler Chrysler Necar 5; reforming methanol, i.e. making it react to obtain hydrogen, is however a very complicated process, that requires also purification from the carbon monoxide the reaction produces. A platinum-ruthenium catalyst is necessary as some carbon monoxide will unavoidably reach the membrane. The level should not exceed 10 parts per million. Furthermore, the start-up times of such a reformer reactor are of about half an hour. Efficiencies of PEMs are in the range of 40-50%.

Manufacturers of PEMs include Dupont, 3M Corporation, and Ballard Power Systems.