Abstract: A membrane separation is incorporated in a distillation cycle for efficient recovery of carbon dioxide from a stream containing natural gas along with carbon dioxide. Methane and carbon dioxide are separated from a feed stream in a first distillation to produce a process stream containing essentially methane and carbon dioxide and which is substantially free to ethane and higher molecular weight hydrocarbons. The process stream consisting essentially of methane and carbon dioxide is subjected to further distillation to produce a carbon dioxide-rich product stream and a process stream enriched in methane. The methane-enriched process stream is then passed to a membrane separation unit for separating methane and carbon dioxide and for producing a high purity methane product stream.