UNITED STATES
                    SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549

                                 FORM 10-Q


[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934

             For the Quarterly Period Ended September 30, 1996

                                    or

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934

For the transition period from                    to                   


                         Commission File #0-17593


                   Inland Monthly Income Fund II, L.P. 
          (Exact name of registrant as specified in its charter)



         Delaware                                     #36-3587209
  (State or other jurisdiction      (I.R.S. Employer Identification Number) 
of incorporation or organization)



       2901 Butterfield Road, Oak Brook, Illinois         60521
        (Address of principal executive office)         (Zip Code)


    Registrant's telephone number, including area code:  630-218-8000


                                 N/A                        
              (Former name, former address and former fiscal
                    year, if changed since last report)


Indicate by check mark  whether  the  registrant  (1) has filed all reports
required to be filed by Section 13  or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such  reports), and (2) has been subject to
such filing requirements for the past 90 days.  Yes X  No   




                                    -1-



                                  PART I


Item 1.  Financial Statements



                    INLAND MONTHLY INCOME FUND II, L.P.
                          (a limited partnership)

                              Balance Sheets

                 September 30, 1996 and December 31, 1995
                                (unaudited)


                                  Assets
                                  ------
 
                                                        1996         1995
                                                        ----         ----
Current assets:
  Cash and cash equivalents (Note 1).............. $   867,760       981,562
  Accounts and rents receivable...................     121,472       159,975
  Current portion of deferred rent receivable
    (Note 2)......................................       1,516         2,968
  Other assets....................................       1,249           670
                                                   ------------  ------------
    Total current assets..........................     991,997     1,145,175
                                                   ------------  ------------
Investment properties (including acquisition fees
  paid to Affiliates of $1,430,682)(Note 1):
    Land..........................................   3,998,149     3,998,149
    Buildings and improvements....................  13,814,185    13,814,185
                                                   ------------  ------------
                                                    17,812,334    17,812,334
      Less accumulated depreciation...............   3,078,381     2,754,691
                                                   ------------  ------------
    Net investment properties.....................  14,733,953    15,057,643
                                                   ------------  ------------
Other assets:
  Deferred leasing fees to Affiliates (net of
    accumulated amortization of $102,297 and
    $88,728 at September 30, 1996 and December 31,
    1995, respectively) (Note 1)..................     125,435       139,004
  Deferred rent receivable, less current portion
    (Note 2)......................................     375,379       378,600
                                                   ------------  ------------
    Total other assets............................     500,814       517,604
                                                   ------------  ------------
Total assets...................................... $16,226,764    16,720,422
                                                   ============  ============




                See accompanying notes to financial statements.


                                    -2-



                      INLAND MONTHLY INCOME FUND II, L.P.
                            (a limited partnership)

                                Balance Sheets
                                  (continued)

                   September 30, 1996 and December 31, 1995
                                  (unaudited)


                       Liabilities and Partners' Capital
                       ---------------------------------

                                                        1996          1995
                                                        ----          ----
Current liabilities:
  Accounts payable................................ $    14,425         5,494
  Accrued real estate taxes.......................     137,974       180,025
  Distributions payable (Note 4)..................     135,525       140,426
  Due to Affiliates (Note 3)......................         402         7,398
  Deposits held for others........................     237,534       321,855
  Other current liabilities.......................      26,925        26,925
                                                   ------------  ------------
    Total current liabilities.....................     552,785       682,123

Commission payable to Affiliates (Note 3).........     132,000       132,000
                                                   ------------  ------------
Total liabilities.................................     684,785       814,123
                                                   ------------  ------------
Partners' capital (Notes 1 and 4):
  General Partner:
    Capital contribution..........................         500           500
    Cumulative net income.........................      69,669        72,906
                                                   ------------  ------------
                                                        70,169        73,406
                                                   ------------  ------------
  Limited Partners:
    Units of $500. Authorized 80,000 Units,
      50,095.50 Units outstanding (net of
      offering costs of $3,148,734, of which
      $653,165 was paid to Affiliates)............  21,916,510    21,916,510
    Cumulative net income.........................  11,122,575    10,195,854
    Cumulative distributions...................... (17,567,275)  (16,279,471)
                                                   ------------  ------------
                                                    15,471,810    15,832,893
                                                   ------------  ------------
      Total Partners' capital.....................  15,541,979    15,906,299
                                                   ------------  ------------
Total liabilities and Partners' capital........... $16,226,764    16,720,422
                                                   ============  ============






                See accompanying notes to financial statements.


                                    -3-



                      INLAND MONTHLY INCOME FUND II, L.P.
                            (a limited partnership)

                           Statements of Operations

        For the three and nine months ended September 30, 1996 and 1995
                                  (unaudited)

                                         Three months           Nine months
                                            ended                 ended
                                         September 30,         September 30,
                                         -------------         -------------
                                        1996      1995        1996       1995
                                        ----      ----        ----       ----
Income:
  Rental income (Notes 1 and 2).... $ 475,680    479,401  1,427,514  1,437,075
  Additional rental income.........    37,057     36,725    116,464    111,341
  Interest income..................     8,397      8,369     24,078     25,238
  Other income.....................      -          -          -         1,709
                                    ---------- ---------- ---------- ----------
                                      521,134    524,495  1,568,056  1,575,363
                                    ---------- ---------- ---------- ----------
Expenses:
  Professional services to
    Affiliates.....................     3,076      4,620      9,551     15,253
  Professional services to
    non-affiliates.................      -          -        23,665     24,550
  General and administrative
    expenses to Affiliates.........     8,436      7,972     24,499     26,762
  General and administrative
    expenses to non-affiliates.....     2,223      1,951     13,299     11,604
  Property operating expenses to
    Affiliates.....................     8,494      6,956     24,162     22,394
  Property operating expenses to
    non-affiliates.................    68,324     57,814    212,137    185,386
  Depreciation.....................   107,896    107,897    323,690    323,690
  Amortization.....................     4,523      4,524     13,569     13,570
                                    ---------- ---------- ---------- ----------
                                      202,972    191,734    644,572    623,209
                                    ---------- ---------- ---------- ----------
Net income......................... $ 318,162    332,761    923,484    952,154
                                    ========== ========== ========== ==========

Net income (loss) allocated to:
  General Partner..................    (1,079)    (1,079)    (3,237)    (3,237)
  Limited Partners.................   319,241    333,840    926,721    955,391
                                    ---------- ---------- ---------- ----------
Net income......................... $ 318,162    332,761    923,484    952,154
                                    ========== ========== ========== ==========

Net loss allocated to the one
  General Partner Unit............. $  (1,079)    (1,079)    (3,237)    (3,237)
                                    ========== ========== ========== ==========
Net income allocated to Limited 
  Partners per weighted average
  Limited Partnership Units of  
  50,095.50........................ $    6.37       6.66      18.50      19.07
                                    ========== ========== ========== ==========

                See accompanying notes to financial statements.


                                    -4-



                      INLAND MONTHLY INCOME FUND II, L.P.
                            (a limited partnership)

                           Statements of Cash Flows

               For nine months ended September 30, 1996 and 1995
                                  (unaudited)



                                                        1996          1995
                                                        ----          ----
Cash flows from operating activities:
  Net income...................................... $   923,484       952,154
  Adjustments to reconcile net income to
      net cash provided by operating activities:
    Depreciation..................................     323,690       323,690
    Amortization..................................      13,569        13,570 
    Deferred rent receivable......................       4,673       (16,439)
    Changes in assets and liabilities:
      Accounts and rents receivable...............      38,503       (22,540)
      Other assets................................        (579)       (1,775)
      Accounts payable............................       8,931       (29,448)
      Accrued real estate taxes...................     (42,051)       52,279 
      Due to Affiliates...........................      (6,996)        2,254 
      Other current liabilities...................        -          (25,000)
                                                   ------------  ------------
Net cash provided by operating activities.........   1,263,224     1,248,745
                                                   ------------  ------------
Cash flows from financing activities:
  Deposits held for others........................     (84,321)       50,156
  Cash distributions..............................  (1,292,705)   (1,291,129)
                                                   ------------  ------------
Net cash used in financing activities.............  (1,377,026)   (1,240,973)
                                                   ------------  ------------
Net increase (decrease) in cash 
  and cash equivalents............................    (113,802)        7,772
Cash and cash equivalents at beginning of period..     981,562     1,043,893
                                                   ------------  ------------
Cash and cash equivalents at end of period........ $   867,760     1,051,665  
                                                   ============  ============















                See accompanying notes to financial statements.


                                    -5-



                      INLAND MONTHLY INCOME FUND II, L.P.
                            (a limited partnership)

                         Notes to Financial Statements

                              September 30, 1996
                                  (unaudited)


Readers of this  Quarterly  Report  should  refer  to the Partnership's audited
financial statements for the  fiscal  year  ended  December 31, 1995, which are
included  in  the  Partnership's  1995   Annual  Report,  as  certain  footnote
disclosures which would substantially duplicate those contained in such audited
financial statements have been omitted from this Report.


(1) Organization and Basis of Accounting

Inland Monthly Income Fund II,  L.P.  (the "Partnership") was organized on June
20, 1988 by  filing  a  Certificate  of  Limited  Partnership under the Revised
Uniform Limited Partnership Act of  the  State  of Delaware. On August 4, 1988,
the Partnership commenced an Offering of 50,000 (subject to increase to 80,000)
Limited Partnership Units pursuant to  a  Registration under the Securities Act
of 1933. The  Offering  terminated  on  August  4,  1990,  with  total sales of
50,647.14 Units at  $500  per  Unit,  resulting  in  gross offering proceeds of
$25,323,569, not including the General  Partner's contribution for $500. All of
the holders of these Units have  been  admitted to the Partnership. Inland Real
Estate Investment Corporation is the  General  Partner. The Limited Partners of
the Partnership share in the  benefits  of  ownership of the Partnership's real
property investments in proportion to the number of Units held. The Partnership
had repurchased 551.64 Units for $260,285 from various Limited Partners through
the Unit Repurchase Program. There are no funds remaining for the repurchase of
Units through this program.

The preparation of financial  statements  in conformity with generally accepted
accounting principles requires  management  to  make  estimates and assumptions
that affect the reported amounts  of  assets  and liabilities and disclosure of
contingent assets and liabilities at  the  date of the financial statements and
the reported amounts of  revenues  and  expenses  during the reporting periods.
Actual results could differ from those estimates.

Offering costs have been offset against the Limited Partners' capital accounts.

The Partnership's policy is to reduce  the cost basis of investment properties,
including deferred leasing fees and  deferred rent receivable, to its estimated
net realizable value when the investment properties are judged to have suffered
an impairment in value that  is  other than temporary. Estimated net realizable
value is measured by the recoverability of the Partnership's investment through
expected future cash flows on  an  undiscounted  basis. Net realizable value is
inherently subjective and is  based  on  management's  best estimate of current
conditions and assumptions about expected future conditions, including lease-up
periods, rental rates, interest rates and capitalization rates. As of September
30, 1996, no reduction to the cost  basis of the investment properties has been
recorded as the estimated  net  realizable  value  of the investment properties
exceeds their cost basis.


                                    -6-



                      INLAND MONTHLY INCOME FUND II, L.P.
                            (a limited partnership)

                         Notes to Financial Statements
                                  (continued)

                              September 30, 1996
                                  (unaudited)



Depreciation expense is computed using the straight-line method.  Buildings and
improvements are based upon estimated  useful  lives  of  30 to 40 years, while
furniture and fixtures are based upon estimated  useful lives of 5 to 12 years.
Maintenance  and  repair  expenses  are  charged  to  operations  as  incurred.
Significant improvements are capitalized  and  depreciated over their estimated
useful lives.

Deferred leasing fees are amortized on  a  straight-line basis over the term of
the related lease.

Rental income is recognized  on  a  straight-line  basis  over the term of each
lease.  The difference between rental income earned and the cash rent due under
the provisions of the lease agreements is recorded as deferred rent receivable.

The Partnership  considers  all  highly  liquid  investments  purchased  with a
maturity of three months or less to be cash equivalents.  For the periods ended
September 30, 1996 and December 31, 1995, included in cash and cash equivalents
is approximately $227,000 and  $311,000,  respectively, held in an unrestricted
escrow account for the payment of  real  estate taxes for Colonial Manor Living
Center.  The carrying amount of cash, cash equivalents and distribution payable
approximates fair value because of the short maturity of those instruments.

No provision for Federal income taxes  has  been made as the liability for such
taxes is that of the Partners rather than the Partnership.

Statement of  Financial  Accounting  Standards  No.  121,  "Accounting  for the
Impairment of Long-Lived Assets to Be Disposed Of" was issued in March 1995 and
is  effective  for  fiscal  years  beginning  after  December  15,  1995.  This
pronouncement is not  expected  to  have  a  material  effect  on the financial
position or results of operations of the Partnership.

In  the  opinion  of  management,  the  financial  statements  contain  all the
adjustments necessary, which  are  of  a  normal  recurring  nature, to present
fairly the  financial  position  and  results  of  operations  for  the periods
presented herein.  Results of interim periods are not necessarily indicative of
the results to be expected for the year.










                                    -7-



                      INLAND MONTHLY INCOME FUND II, L.P.
                            (a limited partnership)

                         Notes to Financial Statements
                                  (continued)

                              September 30, 1996
                                  (unaudited)



(2) Deferred Rent Receivable

Certain tenant leases contain provisions  providing for stepped rent increases.
Generally accepted accounting principles require that rental income be recorded
for the period of occupancy  using  the  straight-line basis.  The accompanying
financial statements include a decrease  of  $4,673  and an increase of $16,439
for the nine months ended September  30, 1996 and 1995, respectively, of rental
income for the period of occupancy  for  which stepped rent increases apply and
$376,895 and $381,568 in related  accounts  receivable as of September 30, 1996
and December 31, 1995, respectively.   These amounts will be collected over the
terms of the related leases as scheduled rent payments are made.


(3) Transactions with Affiliates

The General  Partner  and  its  Affiliates  are  entitled  to reimbursement for
salaries and expenses of employees  of  the  General Partner and its Affiliates
relating to the administration of the  Partnership.  Such costs are included in
professional services to Affiliates and  general and administrative expenses to
Affiliates, of which $402 and $7,398  was  unpaid  as of September 30, 1996 and
December 31, 1995, respectively.

An Affiliate of the General Partner  earned Property Management Fees of $24,162
and  $22,394  for  the  nine   months   ended  September  30,  1996  and  1995,
respectively, in connection with  managing  the Partnership's properties.  Such
fees are included in property  operating  expenses  to Affiliates, all of which
has been paid as of September 30, 1996.

In connection with the  sale  of  The  Wholesale  Club  on January 8, 1991, the
Partnership recorded $132,000 of  sales  commission  payable to an Affiliate of
the General Partner.    Such  commission  has  been  deferred until the Limited
Partners receive their  Original  Capital  plus  a  return  as specified in the
Partnership Agreement.  Due to the terms and the nature of the sales commission
payable to the Affiliate, it is not practicable for the Partnership to estimate
the fair value of such amount.


(4)  Subsequent Events

During October 1996, the  Partnership  paid  a  distribution of $135,525 to the
Limited Partners.





                                    -8-



Item 2.  Management's  Discussion  and  Analysis  of  Financial  Condition  and
         Results of Operations


Liquidity and Capital Resources

On August 4, 1988, the Partnership  commenced an Offering of 50,000 (subject to
increase to  80,000)  Limited  Partnership  Units  pursuant  to  a Registration
Statement  on  Form  S-11  under  the  Securities  Act  of  1933.  The Offering
terminated on August 4, 1990, with  total  sales of 50,647.14 Units at $500 per
Unit, resulting in gross  offering  proceeds  of $25,323,569, not including the
General Partner's contribution of $500. All  of the holders of these Units have
been admitted to the Partnership.  The Partnership has acquired five properties
utilizing $21,224,542 of capital  proceeds  collected.  On January 8, 1991, the
Partnership sold one of its properties, The Wholesale Club. As of September 30,
1996, cumulative  distributions  to  Limited  Partners  totaled $17,567,275, of
which $4,395,565 represents proceeds from  the  sale  of The Wholesale Club and
$13,171,710  represents  distributable  cash  flow  from  the  properties.  The
Partnership has repurchased  551.64  Units  for  $260,285  from various Limited
Partners through the Unit Repurchase Program.  There are no funds remaining for
the repurchase of Units through this program.

As of September 30,  1996,  the  Partnership  had  cash and cash equivalents of
$867,760, which includes approximately $227,000  held in an unrestricted escrow
account for the payment of real  estate taxes for Colonial Manor Living Center.
The Partnership intends to use  such  remaining funds for distributions and for
working capital requirements.

The properties owned by the Partnership  are  generating cash flow in excess of
the 8% annualized  distributions  to  the  Limited  Partners (paid monthly), in
addition to covering all the operating  expenses  of the Partnership.  In 1995,
the Partnership distributed a total of $50,000 in addition to the 8% annualized
return to the Limited Partners from  1994  excess  cash flow.  In May 1996, the
Partnership distributed $50,000 in addition to  the 8% annualized return to the
Limited Partners from 1995 excess cash  flow.  To the extent that these sources
are insufficient to meet the  Partnership's  needs, the Partnership may rely on
advances from Affiliates of the General Partner, other short-term financing, or
may sell a property.

During May 1996, Euro-Fresh  Market  ("Euro-Fresh")  began its occupancy of the
anchor store of Water Tower Market Plaza in Palatine, Illinois and the shopping
center has been renamed Euro-Fresh Market  Plaza.  Eagle Foods had assigned the
lease on February 4, 1994 to  Certified Grocers Midwest, Inc. ("Certified") who
vacated in August 1995.  Under the original lease, as well as the assignment of
the lease,  Eagle  Foods  has  guaranteed  payments  until  November  1998.  At
September 30, 1996, there were two vacant spaces totaling 3,745 square feet, of
which 1,245 square  feet  was  leased  with  an  expected  commencement date of
November 1, 1996. 









                                    -9-



Results of Operations

At September 30, 1996, the Partnership  owns four operating properties.  Two of
the  Partnership's  four  operating  properties,  Scandinavian  Health  Spa and
Colonial Manor Living Center, are  leased  on  a "triple-net" basis which means
that all expenses of the property are passed through to the tenant.  The leases
of the other two properties  owned  by  the  Partnership, K mart and Euro-Fresh
Market Plaza, provide that  the  Partnership  be responsible for maintenance of
the structure and the parking lot and the tenants are required to reimburse the
Partnership for  portions  of  insurance,  real  estate  taxes  and common area
maintenance.  The Partnership sold  one  of its properties, The Wholesale Club,
on January 8, 1991.

Professional services to Affiliates  decreased  for  the  three and nine months
ended September 30,  1996,  as  compared  to  the  three  and nine months ended
September 30, 1995, due to a decrease in legal and accounting services required
by the Partnership.

General and administrative expenses to Affiliates decreased for the nine months
ended September 30, 1996, as  compared  to  the nine months ended September 30,
1995, due to decreases in marketing  and data processing expenses.  General and
administrative expenses to  non-affiliates  increased  for  the  three and nine
months ended September 30, 1996, as compared to the three and nine months ended
September 30, 1995, due to increases in filing fees and state taxes.

Property operating expenses to non-affiliates  increased for the three and nine
months ended September 30, 1996, as compared to the three and nine months ended
September 30, 1995, due  to  the  increase  in operating expenses at Euro-Fresh
Market Plaza.   Such  expenses  include  repair  and  maintenance and marketing
expenses.  This  increase  was  partially  offset  by  decreases in common area
maintenance, painting and real estate taxes.


























                                   -10-



The following is a list  of  approximate occupancy levels for the Partnership's
investment properties as of the end of each quarter during 1995 and 1996:


                           ______ _ 1995_______       ______  __1996______  _ 
                            at    at    at    at        at    at    at    at
        Properties         3/31  6/30  9/30  12/31     3/31  6/30  9/30  12/31

Scandinavian Health Spa    100%  100%  100%  100%      100%  100%  100%
  Broadview Heights, Ohio

Colonial Manor             100%  100%  100%  100%      100%  100%  100%
  LaGrange, Illinois

K mart                     100%  100%  100%  100%      100%  100%  100%
  Chandler, Arizona

Euro-Fresh Market Plaza
  (formerly known as Water
  Tower Market Plaza)       91%   89%   89%*  89%*      91%*  89%   93%
  Palatine, Illinois

* Certified Grocers Midwest, Inc.  vacated  Water  Tower  Market Plaza in August
  1995.  Certified occupied  29,317  square  feet,  or approximately 56%, of the
  shopping center.  This  occupancy  reflects  the  payment of guaranteed rental
  income received under the original lease to Eagle Foods.




                          PART II - Other Information

Items 1 through 5 are omitted because  of the absence of conditions under which
they are required.

Item 6.  Exhibits and Reports on Form 8-K

     (a) Exhibits:

         (27) Financial Data Schedule

     (b) Reports on Form 8-K:

         None













                                   -11-





                                  SIGNATURES



Pursuant to the  requirements  of  the  Securities  Exchange  Act  of 1934, the
Registrant has duly caused  this  report  to  be  signed  on  its behalf by the
undersigned, thereunto duly authorized.



                            INLAND MONTHLY INCOME FUND II, L.P.
 
                            By:   Inland Real Estate Investment Corporation
                                  General Partner


                                  /S/ ROBERT D. PARKS

                            By:   Robert D. Parks
                                  Chairman
                            Date: November 13, 1996


                                  /S/ PATRICIA A. CHALLENGER

                            By:   Patricia A. Challenger
                                  Senior Vice President
                            Date: November 13, 1996


                                  /S/ KELLY TUCEK

                            By:   Kelly Tucek
                                  Principal Financial Officer and
                                  Principal Accounting Officer
                            Date: November 13, 1996



















                                   -12-