A novel air gap membrane distillation (AGMD) module in which non-porous polymeric hollow fiber condensers (i.e., heat exchangers) were inserted inside the porous hollow fiber membranes was developed. In this module the hot feed was circulated on the outer side of the membrane's lumen and the coolant was circulated counter-currently inside the condenser fibers. The condensation of water vapor occurred in the air gap between the inner surface of the membrane fibers and the outer surface of the condenser fibers. By varying the number of condenser fibers inside the lumen, a different ratio of membrane fiber active surface area to the total surface area of condenser fibers and corresponding packing densities were achieved and examined in desalination of Red Sea water. The effect of membrane type on process performance was investigated with three different hollow fiber membranes with varied wall thickness (two capillary and one tubular). At a feed temperature of 85 °C, the water vapor flux increased from 12 kg/m2h to 18 kg/m2h with the increase in condenser fibers packing density from 9% to 28%, and then decreased to 14 kg/m2h when packing density was increased to 36% due to condensing surface constrain inside the lumen. A higher efficiency of the AGMD process was observed in the case of capillary membranes as compared to tubular membranes due to reduction in wall thickness which facilitated lower mass transfer resistance. The effect of operating conditions including feed and coolant flow rates and temperature difference between the feed and coolant solutions was also investigated. The increase in the feed flow rate had significant effect on vapor flux comparing to that of coolant for all tested AGMD configurations. This effect was more pronounced at high feed temperatures. Based on observed results, an optimal module design was suggested.