This document describes the design and development of a fault-tolerant and dynamically reconfigurable payload processing unit (PPU) for the Pakistan National Student Satellite-1 (PNSS-1). The proposed PPU uses a Xilinx Virtex 5QV field-programmable gate array (FPGA) and a radiation-hardened Leon 3 FT processor. Triple modular redundancy is implemented to minimize effects of single event upsets, single event latchups, and total ionizing dose from radiation in space. The PPU is responsible for receiving, storing, processing, and transmitting data from various satellite payloads. It will provide telemetry to and receive commands from the satellite's data handling unit over a CAN bus or dedicated