The present application is directed to systems and methods for on-board fuel separation. The system includes: a source fuel tank for liquid fuel; a pump; and a membrane module. The membrane module includes a hydrophilic membrane, a retentate channel, and a permeate channel. The retentate and permeate channels are on opposing sides of the membrane. The membrane module receives fuel from the source fuel tank and separates the liquid fuel into a high octane fraction that collects in the retentate channel and a low octane fraction that diffuses through the membrane to the permeate channel. The system further includes a low octane fuel tank for receiving at least a portion of the low octane fraction, a high octane fuel tank for receiving at least a portion of the high octane fraction, and an engine configured to selectively receive at least a portion of the low and high octane fractions.