This paper presents a description and analysis of a high-efficiency hydrogen production system. The main component of the system is a novel steam electrolyzer. In conventional electrolyzers, oxygen produced from electrolysis is usually released into the environment. In this design, natural gas is used to react with the oxygen produced in the electrolysis, reducing reduce the chemical potential difference across the electrolyzer, thus minimizing electricity consumption. The oxygen produced from the electrolysis is consumed in either a total oxidation or a partial oxidation reaction with natural gas. Experiments performed on single cells shown a voltage reduction as much as 1 V when compared to conventional electrolyzers. A heat recovery system (heat exchangers and catalytic converter) has been incorporated to the electrolyzer to obtain a high efficiency hydrogen production system. Results from a thermodynamic analysis show up to 70% efficiency with respect to primary energy source.