In this work, the addition-cyclization reaction involving two immiscible liquid phases has been investigated in a microchannel reactor system. The reaction involves two organic reactants, catalyzed by an inorganic acid. This reaction is conventionally carried out in the semi-batch reactor, where mass transfer limitations can lead to the formation of a variety of structural isomers and other by-products. Also, good mixing in the batch reactor is critical for the high yield and selectivity of the desired product. Microreactor technology provides enhanced heat and mass transfer due to high surface-to-volume ratio. In this study, the performance of the microreactor system was evaluated by studying the effect of different operating conditions on the space-time yield, conversion, yield, and selectivity of the product. Experiments were also conducted in the batch reactor for comparison of its performance to that of the microreactor.