Direct methanol fuel cells using an alkaline anion exchange membrane (AAEM) were prepared, studied, and optimized. The effects of fuel composition and electrode materials were investigated. Membrane electrode assemblies fabricated with Tokuyama^® AAEM and commercial noble metal catalysts achieved peak power densities between 25 and 168 mW cm^-2 depending on the operating temperature, fuel composition, and electrode materials used. Good electrode wettability at the anode was found to be very important for achieving high power densities. The performance of the best AAEM cells was comparable to Nafion^®-based cells under similar conditions. Factors limiting the performance of AAEM MEAs were found to be different from those of Nafion^® MEAs. Improved electrode kinetics for methanol oxidation in alkaline electrolyte at Pt-Ru are apparent at low current densities. At high current densities, rapid CO₂ production converts the hydroxide anions, necessary for methanol oxidation, to bicarbonate and carbonate: consequently, the membrane and interfacial conductivity are drastically reduced. These phenomena necessitate the use of aqueous potassium hydroxide and wettable electrode materials for efficient hydroxide supply to the anode. However, aqueous hydroxide is not needed at the cathode. Compared to AAEM-based fuel cells, methanol fuel cells based on proton-conducting Nafion^® retain better performance at high current densities by providing the benefit of carbon dioxide rejection.