A process for selectively producing C.sub.3 olefins from a catalytically cracked or thermally cracked naphtha stream is disclosed herein. The naphtha stream is introduced into a process unit comprised of a reaction zone, a stripping zone containing a dense phase, a catalyst regeneration zone, and a fractionation zone. The naphtha feedstream is contacted in the reaction zone with a catalyst containing from about 10 to about 50 wt. % of a crystalline zeolite having an average pore diameter less than about 0.7 nanometers at reaction conditions. Vapor products are collected overhead and the catalyst particles are passed through the stripping zone on the way to the catalyst regeneration zone. Volatiles are stripped with steam in the stripping zone and the catalyst particles are sent to the catalyst regeneration zone where coke is burned from the catalyst, and are then recycled to the reaction zone. Overhead products from the reaction zone are passed to a fractionation zone where a stream of C.sub.3 products is recovered and a stream rich in C.sub.4 olefins is recycled to a dilute phase reaction zone in the stripping zone separate from the dense phase of the stripping zone. The olefins can be further processed and polymerized to form a variety of polymer materials.