Production
Today, DME is primarily produced by converting hydrocarbons sourced from natural gas or coal via gasification to synthesis gas (syngas). Synthesis gas is then converted into methanol in the presence of catalyst (usually copper-based), with subsequent methanol dehydration in the presence of a different catalyst (for example, silica-alumina) resulting in the production of DME. As described, this is a two-step (indirect synthesis) process that starts with methanol synthesis and ends with DME synthesis (methanol dehydration). The same process can be conducted using organic waste or biomass. Alternatively, DME can be produced through direct synthesis, using a dual catalyst system that permits both methanol synthesis and dehydration in the same process unit, with no methanol isolation and purification, a procedure that, by eliminating the intermediate methanol synthesis stage, the licensors claim promises efficiency advantages and cost benefits.
Both the one-step and two-step processes above are commercially available. Currently, there is more widespread application of the two-step process since it is relatively simple and start-up costs are relatively low. It is worth mentioning that there is a developing one-step liquid-phase process.

Applications
Dimethyl ether has two primary applications: as a propellant in aerosol canisters, and as a precursor to dimethyl sulfate. As an aerosol propellant, dimethyl ether is useful as a somewhat polar solvent. It can also be used as a refrigerant.

Laboratory reagent and solvent
Dimethyl ether is a low-temperature solvent and extraction agent, applicable to specialised laboratory procedures. Its usefulness is limited by its low boiling point (−23 °C), but the same property facilitates its removal from reaction mixtures. Dimethyl ether is the precursor to the useful alkylating agent, trimethyloxonium tetrafluoroborate.

Fuel
DME is a promising fuel in diesel engines, petrol engines (30% DME / 70% LPG), and gas turbines owing to its high cetane number, which is 55, compared to diesel's, which is 40–53. Only moderate modification are needed to convert a diesel engine to burn DME. The simplicity of this short carbon chain compound leads during combustion to very low emissions of particulate matter, NOx, CO. For these reasons as well as being sulfur-free, dimethyl ether meets even the most stringent emission regulations in Europe (EURO5), U.S. (U.S. 2010), and Japan (2009 Japan). DME is being developed as a synthetic biofuel (BioDME), which can be manufactured from lignocellulosic biomass. Currently the EU is considering BioDME in its potential biofuel mix in 2030, the Volvo Group is the coordinator for the European project BioDME and Mobil is using it in their methanol to gasoline process. The image below illustrates some of processes from various raw materials to DME.

In 2009 a team of university students from Denmark won the Urban Concept/Internal Combustion class at the European Shell Eco Marathon (The Shell Eco Marathon is an unofficial World Championship for mileage) with a vehicle running on 100% DME. The vehicle drove 589 km/liter, fuel equivalent to gasoline with a 50 ccm 2-stroke engine operating by the Diesel principle. As well as winning they beat the old standing record of 306 km/liter, set by the same team in 2007.

Treating warts
A mixture of dimethyl ether and propane is used in an over-the-counter device to treat warts, by freezing them.