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Hydrogen-enriched oxy-combustion gas-turbine technology has been actively studied to meet the challenge of global decarbonization, zero emission, and pursuing higher energy efficiency. Motivated by the development of the Graz cycle, the objective of this work is to investigate the fundamental characteristics of hydrogen-blending oxy-combustion in a steam-diluted environment. The laminar flame speed and ignition delay time of H 2 /CH 4 /O 2 with steam dilution are numerically studied over a wide range of H 2 O dilution ratios (up to 70%) and H 2 contents (0–1) at atmospheric pressure. The results show that steam dilution leads to a reduction in the laminar flame speed and an increase in the ignition delay time. At low dilution ratios, the laminar flame speed decreases almost linearly, except for cases with high H 2 contents. Conversely, at high dilution ratios, the decreasing trend of laminar flame speed diminishes and deviates from linearity. Furthermore, we find that the effect of H 2 addition on the laminar flame speed can be categorized into three zones: linear hydrogen-promoting zone, transition zone, and linear methane-inhibited zone. With increasing dilution ratio, the linear hydrogen-promoting zone expands and the linear methane-inhibited zone reduces. A virtual H 2 O molecule is proposed to identify the thermal and chemical effects of steam dilution at different H 2 contents. Generally, the thermal effect is the major role of steam dilution, and the chemical effect further reduces the laminar flame speed and increases the ignition delay time. The thermal effect on the laminar flame speed increases approximately linearly with dilution ratio, while the chemical effect exhibits a strong nonlinear variation which first increases and then decreases with increasing dilution ratio. Interestingly, the chemical effect of a small amount of H 2 O at high H 2 content even promotes the laminar flame speed. For the ignition delay time, the chemical effect of H 2 O dilution consistently increases with dilution ratio. Moreover, the rate of production analysis indicates that the chemical effect of H 2 O dilution alters the radical pool structure and heat release rate, primarily attributed to the participation of H 2 O in reactions involving crucial radicals. Sensitivity analysis also shows that steam dilution and increasing H 2 content amplify the sensitivity coefficients of rate constants of the elementary reactions. • Laminar flame speed and ignition delay time of H 2 /CH 4 /O 2 flames with H 2 O dilution (0–70 vol%) were numerically studied. • The hydrogen-promoting zone of flame speed expands and the methane-inhibited zone reduces with increasing dilution ratio. • Thermal and chemical effect of H 2 O dilution on H 2 /CH 4 /O 2 flames was quantitatively studied. • The chemical effect on laminar flame speed first increases and then decreases with increasing dilution ratio. • The chemical effect of small amount of H 2 O dilution at high H 2 contents promotes the laminar flame speed of H 2 /CH 4 /O 2 flame. [ABSTRACT FROM AUTHOR]