In the preferred embodiment of the invention, a cooled bipropellant thruster 70 for controlling the on-orbit position and orientation of a spacecraft is provided. The cooled bipropellant thruster 70 uses a liquid fuel and liquid oxidizer. The liquid fuel is decomposed in a first chamber 72 with a catalytic bed of decomposition material 74 and produces at least one reaction gas, which flows to the second reaction chamber 90. The second reaction chamber 90 is heated by the reaction gas, but is cooled by liquid oxidizer flowing through cooling passages 92, 94, 98, and 102, which brings the oxidizer into a heat exchange relationship with the second reaction chamber 90. During the heat exchange relationship, heat is transferred from the second reaction chamber 90 to the oxidizer and the oxidizer transforms into a gas. The gaseous oxidizer is fed into a second reaction chamber 90 to secondarily react with the reaction gas.