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

                            FORM 10-K

 Annual Report Pursuant to Section 13 or 15(d) of The Securities
                      Exchange Act of 1934

          For the Fiscal Year Ended:  December 31, 2008

               Commission file number:  000-51823

                 AEI INCOME & GROWTH FUND 26 LLC
     (Exact name of registrant as specified in its charter)

       State of Delaware                41-2173048
(State or other jurisdiction of      (I.R.S. Employer
incorporation or organization)     Identification No.)

      30 East 7th Street, Suite 1300, St. Paul, Minnesota 55101
            (Address of principal executive offices)

                          (651) 227-7333
                 (Registrant's telephone number)

Securities registered pursuant to Section 12(b) of the Act:
     Title of each class    Name of each exchange on which registered
             None                          None

Securities registered pursuant to Section 12(g) of the Act:
                   Limited Liability Company Units
                        (Title of class)

Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act.  Yes    No [X]

Indicate by check mark if the registrant is not required to  file
reports pursuant to Section 13 or Section 15(d) of the
Exchange Act.  Yes    No [X]

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

Indicate  by  check  mark  if  disclosure  of  delinquent  filers
pursuant  to Item 405 of Regulation S-K is not contained  herein,
and will not be contained, to the best of registrant's knowledge,
in  definitive  proxy or information statements  incorporated  by
reference in Part III of this Form 10-K or any amendment to  this
Form 10-K.  [X]

Indicate  by  check  mark  whether  the  registrant  is  a  large
accelerated filer, an accelerated filer, a non-accelerated filer,
or  a  smaller reporting company.  See the definitions of  "large
accelerated  filer," "accelerated filer" and  "smaller  reporting
company" in Rule 12b-2 of the Exchange Act.
  Large accelerated filer         Accelerated filer
  Non-accelerated  filer          Smaller  reporting company  [X]

Indicate by check mark whether the registrant is a shell  company
(as  defined  in  Rule 12b-2 of the  Act).   Yes     No [X]

As  of  June  30, 2008, there were 1,832,736.0 Units  of  limited
membership interest outstanding and owned by nonaffiliates of the
registrant,  which  Units had an aggregate  market  value  (based
solely  on  the price at which they were sold since there  is  no
ready market for such Units) of $18,327,360.

               DOCUMENTS INCORPORATED BY REFERENCE
 The registrant has not incorporated any documents by reference
                        into this report.


                             PART I

ITEM 1.   BUSINESS.

        AEI  Income  & Growth Fund 26 LLC (the "Company"  or  the
"Registrant") is a limited liability company which was  organized
pursuant to the laws of the State of Delaware on March 14,  2005.
The  registrant  is  comprised of AEI Fund Management  XXI,  Inc.
(AFM),  as  the Managing Member, Robert P. Johnson, the President
and  sole  director of AFM, as the Special Managing  Member,  and
purchasers of LLC Units as Limited Members.  The Company  offered
for  sale up to $100,000,000 of limited membership interests (the
"Units")  (10,000,000  Units  at $10  per  Unit)  pursuant  to  a
registration statement effective October 20, 2005.   The  Company
commenced  operations on April 3, 2006 when minimum subscriptions
of  150,000  LLC Units ($1,500,000) were accepted.  The  offering
terminated  October  19, 2007 when the extended  offering  period
expired.   The  Company received subscriptions for 1,832,736  LLC
Units.   Under the terms of the Operating Agreement, the  Limited
Members and Managing Members contributed funds of $18,327,360 and
$1,000, respectively.

        The  Company was organized to acquire existing and  newly
constructed  commercial properties, to lease such  properties  to
tenants  under  net  leases,  to  hold  such  properties  and  to
eventually sell such properties.  From subscription proceeds, the
Company  purchased eight properties, including partial  interests
in  five properties, at a total cost of $15,376,536.  The balance
of  the  subscription  proceeds was applied to  organization  and
syndication  costs,  working capital reserves and  distributions,
which  represented  a  return  of capital.   The  properties  are
commercial, single tenant buildings leased under net leases.

        The  Company's  properties  were  purchased  without  any
indebtedness.   The  Company will not finance properties  in  the
future to obtain proceeds for new property acquisitions.   If  it
is   required  to  do  so,  the  Company  may  incur   short-term
indebtedness   to  finance  day-to-day  cash  flow   requirements
(including cash flow necessary to repurchase Units).  The Company
may borrow to finance the refurbishing of a property.

        The  Company will hold its properties until the  Managing
Members  determine  that  the sale or other  disposition  of  the
properties  is  advantageous in view of the Company's  investment
objectives.  In deciding whether to sell properties, the Managing
Members will consider factors such as potential appreciation, net
cash flow and income tax considerations.  The Company expects  to
sell some or all of its properties prior to its final liquidation
and  to  reinvest  the  proceeds from such  sales  in  additional
properties.  The Company reserves the right, at the discretion of
the Managing Members, to either distribute proceeds from the sale
of  properties  to  the Members or to reinvest such  proceeds  in
additional  properties,  provided that  sufficient  proceeds  are
distributed  to  the  Limited Members to pay  federal  and  state
income  taxes related to any taxable gain recognized as a  result
of  the  sale.  It is anticipated that the Company will  commence
liquidation through the sale of its remaining properties  ten  to
twelve years after completion of the acquisition phase, depending
upon the then current real estate and money markets, the economic
climate and the income tax consequences to the Members.

ITEM 1.   BUSINESS.  (Continued)

Leases

       Although there are variations in the specific terms of the
leases,  the following is a summary of the general terms  of  the
Company's  leases.  The properties are leased to various  tenants
under  net leases, classified as operating leases.  Under  a  net
lease,   the  tenant  is  responsible  for  real  estate   taxes,
insurance,  maintenance, repairs and operating expenses  for  the
property.   For  some  leases,  the Company  is  responsible  for
repairs  to  the structural components of the building.   At  the
time  the  properties were acquired, the remaining primary  lease
terms varied from 10 to 20 years.  The leases provide the tenants
with  three to four five-year renewal options subject to the same
terms and conditions as the primary term. The leases provide  for
base annual rental payments, payable in monthly installments, and
contain  rent  clauses  which  entitle  the  Company  to  receive
additional rent in future years based on stated rent increases.

Major Tenants

        During 2008, five tenants each contributed more than  ten
percent of the Company's total rental revenue.  The major tenants
in aggregate contributed 85% of total rental revenue in 2008.  It
is  anticipated  that, based on minimum rental payments  required
under  the  leases,  each  major tenant,  except  for  Red  Robin
International, Inc., will continue to contribute  more  than  ten
percent  of rental revenue in 2009 and future years.   Also,  TSA
Stores, Inc. will likely not continue to be a major tenant as the
Company  is  attempting  to sell the  property  it  leases.   Any
failure  of  these  major  tenants could  materially  affect  the
Company's net income and cash distributions.

Competition

        The  Company  is  a minor factor in the  commercial  real
estate  business.   There are numerous entities  engaged  in  the
commercial  real  estate  business which have  greater  financial
resources  than the Company.  At the time the Company  elects  to
dispose  of its properties, it will be in competition with  other
persons and entities to find buyers for its properties.

Employees

        The Company has no direct employees.  Management services
are  performed for the Company by AEI Fund Management,  Inc.,  an
affiliate of AFM.

ITEM 1A.  RISK FACTORS.

       Not required for a smaller reporting company.

ITEM 1B.  UNRESOLVED STAFF COMMENTS.

       Not required for a smaller reporting company.

ITEM 2.   PROPERTIES.

Investment Objectives

         The  Company's  investment  objectives  are  to  acquire
existing  or  newly-developed commercial properties that  provide
(i)  regular  rental income; (ii) growth in lease income  through
rent   escalation  provisions;  (iii)  capital   growth   through
appreciation  in the value of properties; (iv) reduced  occupancy
risks as a result of long-term leases with creditworthy corporate
tenants;  and (v) passive income that may be offset  by  eligible
passive  losses  from other investments for  tax  purposes.   The
Company does not have a policy, and there is no limitation, as to
the  amount or percentage of assets that may be invested  in  any
one  property.   However,  to the extent possible,  the  Managing
Members  attempt  to  diversify the  type  and  location  of  the
properties.

Description of Properties

        The  Company's properties are commercial,  single  tenant
buildings.  The properties were acquired on a debt-free basis and
are  leased  to  various tenants under net leases, classified  as
operating  leases.   The Company holds an  undivided  fee  simple
interest in the properties.

        The  Company's  properties are  subject  to  the  general
competitive conditions incident to the ownership of single tenant
investment  real estate.  Since each property is leased  under  a
long-term  lease, there is little competition until  the  Company
decides to sell the property.  At this time, the Company will  be
competing  with other real estate owners, on both a national  and
local level, in attempting to find buyers for the properties.  In
the  event  of  a tenant default, the Company would be  competing
with  other  real estate owners, who have property vacancies,  to
attract  a  new  tenant  to  lease the property.   The  Company's
tenants  operate in industries that are very competitive and  can
be  affected  by  factors such as changes in  regional  or  local
economies, seasonality and changes in consumer preference.

        The  following table is a summary of the properties  that
the Company acquired and owned as of December 31, 2008.

                               Total Property                Annual   Annual
                    Purchase    Acquisition                  Lease    Rent Per
Property              Date         Costs      Tenant         Payment  Sq. Ft.

Sports Authority Store
 Wichita, KS         4/3/06 to
 (40%)                6/30/06   $2,230,753  TSA Stores, Inc.  $204,665 $ 9.79

Advance Auto Parts Store
 Middletown, OH                              Advance Stores
 (55%)                 6/1/06   $1,022,289    Company, Inc.   $ 71,679 $18.94

Applebee's Restaurant 9/21/06 to             Apple Indiana
 Indianapolis, IN      12/1/06  $3,054,187      II LLC        $220,262 $42.12

Applebee's Restaurant
 Crawfordsville, IN                          Apple Indiana
 (40%)               12/29/06   $1,237,771      II LLC        $ 89,289 $42.44

ITEM 2.   PROPERTIES.  (Continued)

                        Total Property           Annual
                PurchaseAcquisition             Lease  Annual Rent
Property          Date     Costs      Tenant   Payment Per Sq. Ft.

Starbucks Store                               Starbucks
 Bluffton, IN         8/10/07   $1,150,116   Corporation      $ 79,800 $44.16

Red Robin
 Beavercreek, OH                              Red Robin
 (land only)         12/28/07   $1,533,655 International, Inc.$105,000 $ 1.18

Best Buy Store
 Eau Claire, WI                              Best Buy
 (30%)                1/31/08   $2,021,162 Stores, L.P.       $142,222 $10.01

Dick's Sporting Goods
 Fredericksburg, VA                        Dick's Sporting
 (27%)                 5/8/08   $3,126,603   Goods, Inc.      $219,445 $16.69


        The  properties  listed above with  a  partial  ownership
percentage  are  owned  with  affiliates  of  the  Company.   The
remaining interest in the Sports Authority store is owned by  AEI
Income  &  Growth  Fund 25 LLC.  The remaining  interest  in  the
Advance Auto Parts store is owned by AEI Income & Growth Fund  24
LLC.   The  remaining  interest in the Applebee's  restaurant  in
Crawfordsville, Indiana is owned by AEI Income & Growth Fund XXII
Limited  Partnership.  The remaining interests in  the  Best  Buy
store  are  owned  by  AEI  Income  &  Growth  Fund  XXI  Limited
Partnership  and AEI Income & Growth Fund 23 LLC.  The  remaining
interests  in  the Dick's Sporting Goods store are owned  by  AEI
Income & Growth Fund 23 LLC, AEI Income & Growth Fund 24 LLC  and
AEI Income & Growth Fund 25 LLC.

        The  Company accounts for properties owned as tenants-in-
common  with  affiliated entities and/or unrelated third  parties
using  the  proportionate consolidation method.  Each  tenant-in-
common  owns  a  separate, undivided interest in the  properties.
Any tenant-in-common that holds more than a 50% interest does not
control decisions over the other tenant-in-common interests.  The
financial statements reflect only this Company's percentage share
of  the  properties'  land, building and equipment,  liabilities,
revenues and expenses.

        At  the  time the properties were acquired, the remaining
primary  lease  terms  varied from 10 to 20  years.   The  leases
provide  the tenants with three to four five-year renewal options
subject to the same terms and conditions as the primary term.

       Pursuant to the lease agreements, the tenants are required
to provide proof of adequate insurance coverage on the properties
they  occupy.   The Managing Members believe the  properties  are
adequately covered by insurance and consider the properties to be
well-maintained and sufficient for the Company's operations.

ITEM 2.   PROPERTIES.  (Continued)

       For tax purposes, the Company's properties are depreciated
under the Modified Accelerated Cost Recovery System (MACRS).  The
largest depreciable component of a property is the building which
is  depreciated, using the straight-line method, over  39  years.
The  remaining depreciable components of a property are  personal
property  and land improvements which are depreciated,  using  an
accelerated method, over 5 and 15 years, respectively.  Since the
Company  has  tax-exempt Members, the Company is subject  to  the
rules  of  Section 168(h)(6) of the Internal Revenue  Code  which
requires  a  percentage of the properties' depreciable components
to  be  depreciated  over  longer lives using  the  straight-line
method.  In general, the federal tax basis of the properties  for
tax  depreciation purposes will be the same as the basis for book
depreciation purposes.

        At  December 31, 2008, all properties listed  above  were
100% occupied.

ITEM 3.   LEGAL PROCEEDINGS.

       None.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

       None.


                             PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCK-
         HOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

        (a)  As  of December 31, 2008, there were 453 holders  of
record of the registrant's LLC Units.  There is no other class of
security  outstanding or authorized.  The registrant's Units  are
not  a  traded security in any market.  During the period covered
by  this  report, the Company did not sell any equity  securities
that are not registered under the Securities Act of 1933.

       Cash distributions of $29,758 and $20,870 were made to the
Managing  Members  and $962,192 and $674,790  were  made  to  the
Limited   Members   for   2008  and  2007,   respectively.    The
distributions  were made on a quarterly basis and  represent  Net
Cash  Flow,  as  defined,  and a partial  return  of  contributed
capital.   These  distributions  should  not  be  compared   with
dividends paid on capital stock by corporations.

       (b) Not Applicable.

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCK-
         HOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

        (c) Beginning in January 2009, pursuant to Section 7.7 of
the  Operating Agreement, each Limited Member has  the  right  to
present Units to the Company for purchase by submitting notice to
the  Managing  Member during January or July of each  year.   The
purchase  price  of the Units is equal to 85% of  the  net  asset
value  per Unit, as of the first business day of January or  July
of  each year, as determined by the Managing Member in accordance
with  the  provisions of the Operating Agreement.   The  purchase
price  is  equal to 100% of the net asset value per Unit  in  the
case of Units of a deceased investor, who purchased the Units  in
the initial offering and who is a natural person, including Units
held  by  an investor that is an IRA or other qualified plan  for
which  the deceased person was the primary beneficiary, or  Units
held  by  an  investor  that is a grantor  trust  for  which  the
deceased person was the grantor.

        Units tendered to the Company during January and July are
redeemed on April 1st and October 1st, respectively, of each year
subject  to the following limitations.  The Company will  not  be
obligated  to  purchase in any year more than  2%  of  the  total
number  of  Units outstanding on January 1 of such year.   In  no
event shall the Company be obligated to purchase Units if, in the
sole  discretion  of  the Managing Member,  such  purchase  would
impair the capital or operation of the Company.  During the  last
three months of 2008, the Company did not purchase any Units.

Other Information

        The Company is required, pursuant to FINRA Rule 2810,  to
disclose  in each annual report distributed to Limited Members  a
per  Unit  estimated value, the method by which it was  developed
and  the  date  of the data used to develop the estimated  value.
During  the  Company's  offering and for the  three  years  after
completion of the offering (through December 2010), the value  of
a  Unit will be deemed to be $10.00.  This deemed value is  based
solely  on  the offering price, without regard to the assets  and
liabilities of the Company, the cash flow of the Company, or  any
other  valuation factors. However, please note that there  is  no
public  trading market for the Units nor is one ever expected  to
develop and there can be no assurance that Limited Members  could
receive  $10  per unit if such a market did exist and  they  sold
their Units or that they will be able to receive such amount  for
their  Units  in  the future.  In addition, the Company  has  not
performed an evaluation of the Company properties and, therefore,
this  valuation  is  not  based upon the  value  of  the  Company
properties,  nor  does  it represent the amount  Limited  Members
would  receive  if  the  Company properties  were  sold  and  the
proceeds  distributed to the Limited Members in a liquidation  of
the  Company, which amount would most likely be less than $10 per
Unit  as  a  result of the fact that, at the time the Company  is
purchasing  its  properties, the amount of  funds  available  for
investment  in  properties is approximately  15%  less  than  the
offering proceeds due to the payment of organization and offering
expenses,  including selling commissions, as  described  in  more
detail in the Company's Prospectus.

ITEM 6.   SELECTED FINANCIAL DATA.

       Not required for a smaller reporting company.

ITEM  7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          AND RESULTS OF OPERATIONS.

        This  section contains "forward looking statements" which
represent management's expectations or beliefs concerning  future
events, including statements regarding anticipated application of
cash, expected returns from rental income, growth in revenue, the
sufficiency  of  cash  to  meet  operating  expenses,  rates   of
distribution,  and  other  matters.   These,  and  other  forward
looking  statements,  should be evaluated in  the  context  of  a
number  of  factors  that  may  affect  the  Company's  financial
condition and results of operations, including the following:

    Market  and  economic conditions which affect the  value
    of  the  properties the Company owns and the cash  from
    rental income such properties generate;

    the  federal  income tax consequences of rental  income,
    deductions,  gain  on  sales and other  items  and  the
    effects of these consequences for Members;

    resolution  by  the Managing Members of  conflicts  with
    which they may be confronted;

    the   success  of  the  Managing  Members  of   locating
    properties with favorable risk return characteristics;
    the effect of tenant defaults; and

    the  condition of the industries in which the tenants of
    properties owned by the Company operate.

Application of Critical Accounting Policies

        The  preparation  of  the Company's financial  statements
requires  management to make estimates and assumptions  that  may
affect the reported amounts of assets, liabilities, revenues  and
expenses,  and  related  disclosure  of  contingent  assets   and
liabilities. Management evaluates these estimates on  an  ongoing
basis,  including  those related to the carrying  value  of  real
estate  and  the  allocation  by AEI  Fund  Management,  Inc.  of
expenses to the Company as opposed to other funds they manage.

        The Company purchases properties and records them in  the
financial  statements at cost (including capitalized  acquisition
expenses).    The  Company  anticipates  that  for   acquisitions
completed  on  or  after  January  1,  2009,  acquisition-related
transaction costs will be expensed as incurred as a result of the
adoption  of  Statement  of  Financial Accounting  Standards  No.
141(R),  Business  Combinations.  The  Company  tests  long-lived
assets for recoverability when events or changes in circumstances
indicate  that  the carrying value may not be  recoverable.   For
properties   the  Company  will  hold  and  operate,   management
determines  whether  impairment has  occurred  by  comparing  the
property's   probability-weighted  cash  flows  to  its   current
carrying   value.   For  properties  held  for  sale,  management
determines  whether  impairment has  occurred  by  comparing  the
property's estimated fair value less cost to sell to its  current
carrying  value.   If  the carrying value  is  greater  than  the
realizable  value, an impairment loss is recorded to  reduce  the
carrying value of the property to its realizable value.   Changes
in  these  assumptions or analysis may cause material changes  in
the carrying value of the properties.

        AEI  Fund Management, Inc. allocates expenses to each  of
the  funds  they manage primarily on the basis of the  number  of
hours  devoted  by their employees to each fund's affairs.   They
also  allocate  expenses at the end of each month  that  are  not
directly related to a fund's operations based upon the number  of
investors  in the fund and the fund's capitalization relative  to
other  funds they manage.  The Company reimburses these  expenses
subject  to  detailed  limitations  contained  in  the  Operating
Agreement.


ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS.  (Continued)

        Management  of the Company has discussed the  development
and   selection  of  the  above  accounting  estimates  and   the
management  discussion  and analysis disclosures  regarding  them
with the managing member of the Company.

Results of Operations

        For  the  year  ended  December  31,  2008,  the  Company
recognized rental income from continuing operations of  $838,939,
representing  twelve  months rent from five properties  and  rent
from  two  properties acquired during the period.  For  the  year
ended  December  31, 2007, the Company recognized  rental  income
from  continuing  operations  of  $413,705,  representing  twelve
months  rent  from three properties and rent from two  properties
acquired during the period.

        For  the  years  ended December 31, 2008  and  2007,  the
Company  incurred  LLC  administration expenses  from  affiliated
parties   of   $191,343   and  $117,958,   respectively.    These
administration  expenses  include  costs  associated   with   the
management of the properties, processing distributions, reporting
requirements and communicating with the Limited Members.   During
the  same  periods,  the Company incurred LLC administration  and
property  management expenses from unrelated parties  of  $25,863
and  $18,126,  respectively.   These  expenses  represent  direct
payments  to  third  parties for legal and  filing  fees,  direct
administrative costs, outside audit costs, taxes,  insurance  and
other   property   costs.   As  the  Company  raised   additional
subscription  proceeds and purchased additional  properties,  the
administration and property management expenses increased.

        For  the  years  ended December 31, 2008  and  2007,  the
Company  recognized  interest income  of  $74,599  and  $163,247,
respectively.   In  2008, interest income decreased  due  to  the
Company having less money invested in a money market account  due
to property acquisitions and lower money market interest rates in
2008,  when  compared  to 2007.  These decreases  were  partially
offset  by additional interest received on construction  advances
in 2008.

        In  accordance  with  Statement of  Financial  Accounting
Standards  No. 144, Accounting for the Impairment or Disposal  of
Long-Lived  Assets,  upon  complete disposal  of  a  property  or
classification of a property as Real Estate Held  for  Sale,  the
Company  includes the operating results and sale of the  property
in   discontinued   operations.    In   addition,   the   Company
reclassifies the prior periods' operating results of the property
to  discontinued  operations.  For the year  ended  December  31,
2008,  the Company recognized income from discontinued operations
of  $190,252 representing rental income less property  management
expenses.   For  the  year ended December 31, 2007,  the  Company
recognized  income  from  discontinued  operations  of   $135,992
representing rental income less property management expenses  and
depreciation.

        The  Company  is attempting to sell the Sports  Authority
store  in  Wichita, Kansas.  At December 31, 2008 and  2007,  the
property was classified as Real Estate Held for Sale with a  book
value of $2,126,435.

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS.  (Continued)

         Management  believes  inflation  has  not  significantly
affected  income  from  operations.   Leases  may  contain   rent
increases, based on the increase in the Consumer Price Index over
a  specified period, which will result in an increase  in  rental
income over the term of the leases.  Inflation also may cause the
real  estate  to  appreciate in value.   However,  inflation  and
changing  prices  may  have an adverse impact  on  the  operating
margins  of  the  properties' tenants, which could  impair  their
ability  to  pay rent and subsequently reduce the Net  Cash  Flow
available for distributions.

Liquidity and Capital Resources

        The  Company's primary sources of cash are proceeds  from
the  sale  of Units, interest income, rental income and  proceeds
from  the  sale  of  property.  Its  primary  uses  of  cash  are
investment  in real properties, payment of expenses  involved  in
the sale of Units, the management of properties, the organization
and   administration  of  the  Company,  and   the   payment   of
distributions.

        The  Company  generated $851,975 of cash from  operations
during  the year ended December 31, 2008, representing net income
of  $600,530 and a non-cash expense of $286,054 for depreciation,
which  were partially offset by $34,609 in net timing differences
in the collection of payments from the tenants and the payment of
expenses.  The Company generated $637,819 of cash from operations
during  the year ended December 31, 2007, representing net income
of  $405,758 and a non-cash expense of $232,428 for depreciation,
which were partially offset by $367 in net timing differences  in
the  collection of payments from the tenants and the  payment  of
expenses.

        The  major  components of the Company's  cash  flow  from
investing activities are investments in real estate and  proceeds
from the sale of real estate.  During the year ended December 31,
2008,   the  Company  expended  $3,735,326  to  invest  in   real
properties  (inclusive of acquisition expenses).  On January  31,
2008, the Company purchased a 30% interest in a Best Buy store in
Eau  Claire,  Wisconsin for $2,021,162.  Also during the  period,
the  Company paid $1,714,164, including acquisition expenses, for
the   construction  of  the  Dick's  Sporting  Goods   store   in
Fredericksburg, Virginia.

        During  the  year  ended December 31, 2007,  the  Company
expended  $4,096,210 to invest in real properties  (inclusive  of
acquisition expenses).  On August 10, 2007, the Company purchased
a  Starbucks  store  in  Bluffton, Indiana  for  $1,150,116.   On
December  28,  2007, the Company purchased land  in  Beavercreek,
Ohio for $1,533,655.  On December 17, 2007, the Company purchased
a  27%  interest in a parcel of land in Fredericksburg,  Virginia
for  $1,412,439,  including acquisition  expenses.   Simultaneous
with the purchase of the land, the Company entered into a Project
Construction and Development Financing Agreement under which  the
Company  advanced funds for the construction of a Dick's Sporting
Goods store on the site.

       During the offering of Units, the Company's primary source
of  cash  flow  was  from  the sale of LLC  Units.   The  Company
commenced  the  offering of LLC Units to  the  public  through  a
registration statement that became effective October 20, 2005 and
continued  until  October 19, 2007, when  the  extended  offering
period  expired.  The Company raised a total of $18,327,360  from
the  sale  of  1,832,736 Units.  From subscription proceeds,  the
Company paid organization and syndication costs (which constitute
a reduction of capital) of $2,706,815.


ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS.  (Continued)

        After  completion of the acquisition phase, the Company's
primary  use of cash flow is distribution and redemption payments
to   Members.    The  Company  declares  its  regular   quarterly
distributions  before  the  end of  each  quarter  and  pays  the
distribution  in  the first week after the end of  each  quarter.
For  the  years  ended December 31, 2008 and  2007,  the  Company
declared  distributions  of $991,950 and $695,660,  respectively,
which  were allocated 97% to the Limited Members and  3%  to  the
Managing Members.

        Beginning  in  April 2009, the Company may acquire  Units
from  Limited  Members  who  have tendered  their  Units  to  the
Company.  Such Units may be acquired at a discount.  The  Company
will not be obligated to purchase in any year more than 2% of the
total number of Units outstanding on January 1 of such year.   In
no  event shall the Company be obligated to purchase Units if, in
the  sole discretion of the Managing Member, such purchase  would
impair the capital or operation of the Company.

       The continuing rent payments from the properties should be
adequate to fund continuing distributions and meet other  Company
obligations on both a short-term and long-term basis.

The Economy and Market Conditions

       The impact of conditions in the current economy, including
the  turmoil  in the credit markets, has adversely affected  many
real   estate  companies.   However,  the  absence  of   mortgage
financing  on  the Company's properties eliminates the  risks  of
foreclosure and debt-refinancing that can negatively  impact  the
value  and  distributions  of leveraged  real  estate  companies.
Nevertheless, a prolonged economic downturn may adversely  affect
the operations of the Company's tenants and their cash flows.  If
a  tenant were to default on its lease obligations, the Company's
income  would decrease, its distributions would likely be reduced
and the value of its properties might decline.

        The Company's plan was to periodically sell properties to
generate  capital gains that would be included in  the  Company's
regular quarterly distributions and to make special distributions
on  occasion.   Beginning in the fourth quarter of 2008,  general
economic conditions caused the volume of property sales  to  slow
dramatically for all real estate sellers.  In 2008,  the  Company
did  not  complete  any property sales and  may  have  difficulty
completing a property sale in 2009.  Until property sales  occur,
quarterly   distributions   going  forward   will   reflect   the
distribution  of net core rental income and capital reserves,  if
any.  Distribution rates in 2009 are expected to be variable  and
less  than  historical  distribution rates  until  such  time  as
economic conditions allow the Company to begin selling properties
at acceptable prices and generating gains for distribution.

ITEM  7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT  MARKET
          RISK.

       Not required for a smaller reporting company.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

       See accompanying index to financial statements.





                 AEI INCOME & GROWTH FUND 26 LLC

                  INDEX TO FINANCIAL STATEMENTS






Report of Independent Registered Public Accounting Firm

Balance Sheet as of December 31, 2008 and 2007
Statements for the Years Ended December 31, 2008 and 2007:

     Income

     Cash Flows

     Changes in Members' Equity (Deficit)

Notes to Financial Statements




     REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Members:
AEI Income & Growth Fund 26 LLC
St. Paul, Minnesota



     We have audited the accompanying balance sheet of AEI Income
& Growth Fund 26 LLC (a Delaware limited liability company) as of
December 31, 2008 and 2007 and the related statements of  income,
cash  flows  and  changes in members' equity for the  years  then
ended.   The  Company's  management  is  responsible  for   these
financial  statements.   Our  responsibility  is  to  express  an
opinion on these financial statements based on our audit.

      We conducted our audits in accordance with the standards of
the  Public  Company Accounting Oversight Board (United  States).
Those  standards require that we plan and perform  the  audit  to
obtain   reasonable   assurance  about  whether   the   financial
statements are free of material misstatement.  The company is not
required to have, nor were we engaged to perform, an audit of its
internal  control over financial reporting.  Our  audit  included
consideration of internal control over financial reporting  as  a
basis for designing audit procedures that are appropriate in  the
circumstances, but not for the purpose of expressing  an  opinion
on  the  effectiveness  of the company's  internal  control  over
financial  reporting.  Accordingly, we express no  such  opinion.
An  audit  also  includes examining, on a  test  basis,  evidence
supporting   the  amounts  and  disclosures  in   the   financial
statements,   assessing  the  accounting  principles   used   and
significant  estimates made by management, as well as  evaluating
the  overall  financial statement presentation.  We believe  that
our audits provide a reasonable basis for our opinion.

      In  our opinion, the financial statements referred to above
present  fairly, in all material respects, the financial position
of  AEI  Income & Growth Fund 26 LLC as of December 31, 2008  and
2007,  and  the results of its operations and its cash flows  for
the  years  then ended, in conformity with accounting  principles
generally accepted in the United States of America.




                         /s/ Boulay, Heutmaker, Zibell & Co. P.L.L.P.
                                   Certified Public Accountants

Minneapolis, Minnesota
March 26, 2009
<PAGE>
                 AEI INCOME & GROWTH FUND 26 LLC
                          BALANCE SHEET
                           DECEMBER 31

                             ASSETS

                                                       2008          2007
CURRENT ASSETS:
  Cash                                             $   388,653   $ 4,249,562
  Receivables                                            2,283         4,102
                                                    -----------   -----------
      Total Current Assets                             390,936     4,253,664
                                                    -----------   -----------
INVESTMENTS IN REAL ESTATE:
  Land                                               5,294,367     4,629,110
  Buildings and Equipment                            7,851,416     4,781,347
  Accumulated Depreciation                            (497,187)     (211,133)
                                                    -----------   -----------
                                                    12,648,596     9,199,324
  Real Estate Held for Sale                          2,126,435     2,126,435
                                                    -----------   -----------
      Net Investments in Real Estate                14,775,031    11,325,759
                                                    -----------   -----------
           Total  Assets                           $15,165,967   $15,579,423
                                                    ===========   ===========

                       LIABILITIES AND MEMBERS' EQUITY

CURRENT LIABILITIES:
  Payable to AEI Fund Management, Inc.             $    28,015   $    90,239
  Distributions Payable                                247,987       233,595
  Unearned Rent                                         25,796             0
                                                    -----------   -----------
      Total Current Liabilities                        301,798       323,834
                                                    -----------   -----------
MEMBERS' EQUITY (DEFICIT):
  Managing Members                                     (21,717)       (9,975)
  Limited Members, $10 per Unit;
    10,000,000 Units authorized;
    1,832,736  Units issued and outstanding         14,885,886    15,265,564
                                                    -----------   -----------
      Total Members' Equity                         14,864,169    15,255,589
                                                    -----------   -----------
        Total Liabilities and Members' Equity      $15,165,967   $15,579,423
                                                    ===========   ===========

 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
</PAGE>
<PAGE>
                 AEI INCOME & GROWTH FUND 26 LLC
                       STATEMENT OF INCOME
                 FOR THE YEARS ENDED DECEMBER 31


                                                       2008         2007

RENTAL INCOME                                     $   838,939    $   413,705

EXPENSES:
  LLC Administration - Affiliates                     191,343        117,958
  LLC Administration and Property
     Management - Unrelated Parties                    25,863         18,126
  Depreciation                                        286,054        171,102
                                                   -----------    -----------
      Total Expenses                                  503,260        307,186
                                                   -----------    -----------

OPERATING INCOME                                      335,679        106,519

OTHER INCOME:
  Interest Income                                      74,599        163,247
                                                   -----------    -----------

INCOME FROM CONTINUING OPERATIONS                     410,278        269,766

Income from Discontinued Operations                   190,252        135,992
                                                   -----------    -----------
NET INCOME                                        $   600,530    $   405,758
                                                   ===========    ===========
NET INCOME ALLOCATED:
  Managing Members                                $    18,016    $    12,173
  Limited Members                                     582,514        393,585
                                                   -----------    -----------
                                                  $   600,530    $   405,758
                                                   ===========    ===========
INCOME PER LLC UNIT:
  Continuing Operations                           $       .22    $       .20
  Discontinued Operations                                 .10            .10
                                                   -----------    -----------
       Total                                      $       .32    $       .30
                                                   ===========    ===========
Weighted Average Units Outstanding                  1,832,736      1,327,999
                                                   ===========    ===========

 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
</PAGE>
<PAGE>
                 AEI INCOME & GROWTH FUND 26 LLC
                     STATEMENT OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31

                                                        2008         2007

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net Income                                       $   600,530   $   405,758

  Adjustments To Reconcile Net Income
  To Net Cash Provided By Operating Activities:
     Depreciation                                      286,054       232,428
     (Increase) Decrease in Receivables                  1,819        (4,102)
     Increase (Decrease) in Payable to
        AEI Fund Management, Inc.                      (62,224)        3,735
     Increase in Unearned Rent                          25,796             0
                                                    -----------   -----------
       Total Adjustments                               251,445       232,061
                                                    -----------   -----------
       Net Cash Provided By
           Operating Activities                        851,975       637,819
                                                    -----------   -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Investments in Real Estate                       (3,735,326)   (4,096,210)
                                                    -----------   -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Capital Contributions from Limited  Members                0     9,506,092
  Organization and Syndication Costs                         0    (1,399,799)
  Distributions Paid to Members                       (977,558)     (549,984)
                                                    -----------   -----------
       Net Cash Provided By (Used For)
           Financing Activities                       (977,558)    7,556,309
                                                    -----------   -----------

NET INCREASE (DECREASE) IN CASH                     (3,860,909)    4,097,918

CASH, beginning of year                              4,249,562       151,644
                                                    -----------   -----------
CASH, end of year                                  $   388,653   $ 4,249,562
                                                    ===========   ===========

 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
</PAGE>
<PAGE>
                 AEI INCOME & GROWTH FUND 26 LLC
        STATEMENT OF CHANGES IN MEMBERS' EQUITY (DEFICIT)
                 FOR THE YEARS ENDED DECEMBER 31


                                                                 Limited
                                                                  Member
                             Managing    Limited                  Units
                             Members     Members       Total   Outstanding


BALANCE,  December 31, 2006 $  (1,278) $ 7,440,476  $ 7,439,198    882,126.8

  Capital Contributions             0    9,506,092    9,506,092    950,609.2

   Organization and
     Syndication Costs              0   (1,399,799)  (1,399,799)

  Distributions Declared      (20,870)    (674,790)    (695,660)

  Net Income                   12,173      393,585      405,758
                             ---------  -----------  ----------  -----------
BALANCE, December 31, 2007     (9,975)  15,265,564   15,255,589  1,832,736.0

  Distributions Declared      (29,758)    (962,192)    (991,950)

  Net Income                   18,016      582,514      600,530
                             ---------  -----------  ----------  -----------
BALANCE,  December 31, 2008 $ (21,717) $14,885,886  $14,864,169  1,832,736.0
                             =========  ===========  =========== ===========

 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
</PAGE>
<PAGE>
                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2008 AND 2007

(1)  Organization -

     AEI  Income  &  Growth  Fund 26 LLC ("Company"),  a  Limited
     Liability  Company, was formed on March 14, 2005 to  acquire
     and  lease commercial properties to operating tenants.   The
     Company's operations are managed by AEI Fund Management XXI,
     Inc.  ("AFM"), the Managing Member.  Robert P. Johnson,  the
     President  and sole director of AFM, serves as  the  Special
     Managing  Member.  AFM is a wholly owned subsidiary  of  AEI
     Capital  Corporation of which Mr. Johnson  is  the  majority
     shareholder.    AEI  Fund  Management,  Inc.   ("AEI"),   an
     affiliate  of AFM, performs the administrative and operating
     functions for the Company.

     The  terms of the offering call for a subscription price  of
     $10  per LLC Unit, payable on acceptance of the offer.   The
     Company  commenced operations on April 3, 2006 when  minimum
     subscriptions   of  150,000  LLC  Units  ($1,500,000)   were
     accepted.   The offering terminated October 19,  2007,  when
     the  extended offering period expired.  The Company received
     subscriptions for 1,832,736 Units.  Under the terms  of  the
     Operating  Agreement,  the  Limited  Members  and   Managing
     Members   contributed  funds  of  $18,327,360  and   $1,000,
     respectively.  The Company shall continue until December 31,
     2055,  unless dissolved, terminated and liquidated prior  to
     that date.

     During operations, any Net Cash Flow, as defined, which  the
     Managing Members determine to distribute will be distributed
     97%  to  the Limited Members and 3% to the Managing Members.
     Distributions to Limited Members will be made  pro  rata  by
     Units.

     Any  Net  Proceeds  of Sale, as defined, from  the  sale  or
     financing of properties which the Managing Members determine
     to distribute will, after provisions for debts and reserves,
     be  paid  in  the following manner: (i) first,  99%  to  the
     Limited  Members  and 1% to the Managing Members  until  the
     Limited  Members  receive  an amount  equal  to:  (a)  their
     Adjusted  Capital Contribution plus (b) an amount  equal  to
     6.5%  of  their  Adjusted  Capital Contribution  per  annum,
     cumulative  but not compounded, to the extent not previously
     distributed  from Net Cash Flow; (ii) any remaining  balance
     will  be distributed 90% to the Limited Members and  10%  to
     the  Managing Members.  Distributions to the Limited Members
     will be made pro rata by Units.

     For  tax  purposes,  profits  from  operations,  other  than
     profits  attributable  to  the  sale,  exchange,  financing,
     refinancing  or  other  disposition  of  property,  will  be
     allocated 97% to the Limited Members and 3% to the  Managing
     Members.   Net losses from operations will be allocated  99%
     to the Limited Members and 1% to the Managing Members.

                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2008 AND 2007

(1)  Organization - (Continued)

     For  tax purposes, profits arising from the sale, financing,
     or  other  disposition  of property  will  be  allocated  in
     accordance  with  the Operating Agreement  as  follows:  (i)
     first,  to  those  Members with deficit  balances  in  their
     capital  accounts  in an amount equal to  the  sum  of  such
     deficit  balances; (ii) second, 99% to the  Limited  Members
     and  1%  to the Managing Members until the aggregate balance
     in  the Limited Members' capital accounts equals the sum  of
     the Limited Members' Adjusted Capital Contributions plus  an
     amount equal to 6.5% of their Adjusted Capital Contributions
     per  annum, cumulative but not compounded, to the extent not
     previously  allocated;  (iii)  third,  the  balance  of  any
     remaining  gain  will then be allocated 90% to  the  Limited
     Members  and  10% to the Managing Members.  Losses  will  be
     allocated 99% to the Limited Members and 1% to the  Managing
     Members.

     The  Managing Members are not required to currently  fund  a
     deficit capital balance.  Upon liquidation of the Company or
     withdrawal  by a Managing Member, the Managing Members  will
     contribute to the Company an amount equal to the  lesser  of
     the  deficit balances in their capital accounts or 1.01%  of
     the  total capital contributions of the Limited Members over
     the amount previously contributed by the Managing Members.

(2)  Summary of Significant Accounting Policies -

     Financial Statement Presentation

       The  accounts of the Company are maintained on the accrual
       basis  of  accounting for both federal income tax purposes
       and financial reporting purposes.

     Accounting Estimates

       Management  uses  estimates and assumptions  in  preparing
       these  financial statements in accordance  with  generally
       accepted  accounting  principles.   Those  estimates   and
       assumptions may affect the reported amounts of assets  and
       liabilities,  the  disclosure  of  contingent  assets  and
       liabilities,  and  the  reported  revenues  and  expenses.
       Actual results could differ from those estimates.

       The  Company regularly assesses whether market events  and
       conditions  indicate  that it is  reasonably  possible  to
       recover  the carrying amounts of its investments  in  real
       estate  from  future operations and sales.   A  change  in
       those  market events and conditions could have a  material
       effect on the carrying amount of its real estate.

     Cash Concentrations of Credit Risk

       The   Company's   cash  is  deposited  in  one   financial
       institution  and at times during the year  it  may  exceed
       FDIC insurance limits.

                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2008 AND 2007

(2)  Summary of Significant Accounting Policies - (Continued)

     Receivables

       Credit  terms are extended to tenants in the normal course
       of   business.    The  Company  performs  ongoing   credit
       evaluations  of  its customers' financial  condition  and,
       generally, requires no collateral.

       Receivables   are   recorded  at   their   estimated   net
       realizable  value.   The  Company  follows  a  policy   of
       providing  an  allowance for doubtful  accounts;  however,
       based on historical experience, and its evaluation of  the
       current  status  of  receivables, the Company  is  of  the
       belief  that  such  accounts will be  collectible  in  all
       material  respects and thus an allowance is not necessary.
       Accounts  are considered past due if payment is  not  made
       on  a timely basis in accordance with the Company's credit
       terms.   Receivables considered uncollectible are  written
       off.

     Income Taxes

       The  income or loss of the Company for federal income  tax
       reporting  purposes  is  includable  in  the  income   tax
       returns  of  the Members.  In general, no recognition  has
       been  given to income taxes in the accompanying  financial
       statements.

       The  tax  return  and the amount of distributable  Company
       income  or loss are subject to examination by federal  and
       state  taxing authorities.  If such an examination results
       in  changes to distributable Company income or  loss,  the
       taxable   income   of  the  members  would   be   adjusted
       accordingly.

     Real Estate

       The  Company's  real estate is leased  under  net  leases,
       classified  as operating leases.  The leases  provide  for
       base   annual   rental   payments   payable   in   monthly
       installments.   The  Company  recognizes  rental   revenue
       according  to  the  terms of the individual  leases.   For
       leases   that   contain  stated  rental   increases,   the
       increases  are  recognized in the year in which  they  are
       effective.   Contingent  rental  payments  are  recognized
       when  the  contingencies on which the payments  are  based
       are  satisfied  and the rental payments become  due  under
       the terms of the leases.

       The  Company  purchases properties  and  records  them  at
       cost.   The  Company compares the carrying amount  of  its
       properties  to  the estimated probability-weighted  future
       cash  flows expected to result from the property  and  its
       eventual  disposition.  If the sum of the expected  future
       cash  flows  is  less  than the  carrying  amount  of  the
       property,  the  Company recognizes an impairment  loss  by
       the  amount  by which the carrying amount of the  property
       exceeds the fair value of the property.

                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2008 AND 2007

(2)  Summary of Significant Accounting Policies - (Continued)

       The  Company has capitalized as Investments in Real Estate
       certain  costs  incurred in the review and acquisition  of
       the  properties.  The costs were allocated  to  the  land,
       buildings and equipment.

       The   buildings   and  equipment  of   the   Company   are
       depreciated  using the straight-line method for  financial
       reporting purposes based on estimated useful lives  of  25
       years and 5 years, respectively.

       In  accordance  with  Statement  of  Financial  Accounting
       Standards  No.  144,  Accounting  for  the  Impairment  or
       Disposal  of Long-Lived Assets, upon complete disposal  of
       a  property or classification of a property as Real Estate
       Held  for Sale, the Company includes the operating results
       and  sale of the property in discontinued operations.   In
       addition,  the  Company reclassifies  the  prior  periods'
       operating   results  of  the  property   to   discontinued
       operations.

       The  Company  accounts for properties owned as tenants-in-
       common  with  affiliated entities and/or  unrelated  third
       parties  using  the  proportionate  consolidation  method.
       Each  tenant-in-common owns a separate, undivided interest
       in  the properties.  Any tenant-in-common that holds  more
       than  a  50% interest does not control decisions over  the
       other    tenant-in-common   interests.    The    financial
       statements  reflect only this Company's  percentage  share
       of   the   properties'  land,  building   and   equipment,
       liabilities, revenues and expenses.

       The  Company's  properties  are subject  to  environmental
       laws  and  regulations  adopted  by  various  governmental
       entities  in the jurisdiction in which the properties  are
       located.    These  laws  could  require  the  Company   to
       investigate  and remediate the effects of the  release  or
       disposal  of  hazardous materials at  these  locations  if
       found.  For each property, an environmental assessment  is
       completed  prior to acquisition.  In addition,  the  lease
       agreements  typically  strictly prohibit  the  production,
       handling, or storage of hazardous materials (except  where
       incidental  to  the  tenant's  business  such  as  use  of
       cleaning  supplies)  in violation  of  applicable  law  to
       restrict  environmental and other  damage.   Environmental
       liabilities  are  recorded  when  it  is  determined   the
       liability  is  probable and the costs  can  reasonably  be
       estimated.   There were no environmental issues  noted  or
       liabilities recorded at December 31, 2008 and 2007.

     Fair Value Measurements

       Statement  of Financial Accounting Standard No. 157  "Fair
       Value  Measurements"  ("SFAS  157")  defines  fair  value,
       outlines  a  framework for measuring fair  value,  details
       the  required  disclosures and was  effective  January  1,
       2008.   SFAS  157's requirements for certain  nonfinancial
       assets  and  liabilities recognized or disclosed  at  fair
       value  on  a nonrecurring basis are deferred until  fiscal
       years beginning after November 15, 2008.


                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2008 AND 2007

(2)  Summary of Significant Accounting Policies - (Continued)

       Under  SFAS  157, fair value is defined as the price  that
       would  be received to sell an asset or paid to transfer  a
       liability   in  an  orderly  transaction  between   market
       participants  at the measurement date in the principal  or
       most   advantageous  market.   SFAS  157   establishes   a
       hierarchy  in determining the fair value of  an  asset  or
       liability.  The fair value hierarchy has three  levels  of
       inputs,   both  observable  and  unobservable.  SFAS   157
       requires  the utilization of the lowest possible level  of
       input  to  determine fair value.  Level 1  inputs  include
       quoted  market  prices in an active market  for  identical
       assets  or  liabilities.  Level 2 inputs are market  data,
       other  than  Level 1, that are observable either  directly
       or  indirectly.   Level  2 inputs  include  quoted  market
       prices  for  similar assets or liabilities, quoted  market
       prices   in  an  inactive  market,  and  other  observable
       information  that  can  be corroborated  by  market  data.
       Level  3  inputs  are  unobservable  and  corroborated  by
       little  or  no market data.  The Company has no assets  or
       liabilities  measured at fair value on a  recurring  basis
       that  would  require disclosure under this  pronouncement.
       When  testing for recoverability of properties under  SFAS
       No.144, Accounting for the Impairment or Disposal of Long-
       Lived  Assets, the provisions of this statement  are  used
       when comparing fair value to carrying value.

     Recently Issued Accounting Pronouncements

       In  December  2007,  the  Financial  Accounting  Standards
       Board  issued Statement of Financial Accounting  Standards
       No.  141  (revised  2007), "Business Combinations"  ("SFAS
       141(R)"),  which  establishes principles and  requirements
       for  how  an acquirer shall recognize and measure  in  its
       financial  statements  the identifiable  assets  acquired,
       the  liabilities assumed, any noncontrolling  interest  in
       the  acquiree,  and any goodwill acquired  in  a  business
       combination.  Additionally, SFAS 141(R) requires  that  an
       acquirer  must  immediately expense all acquisition  costs
       and  fees  associated  with  an acquisition.  SFAS  141(R)
       became  effective  on  January 1,  2009.   We  expect  the
       adoption  of SFAS 141(R) to have an impact on our  results
       of  operations  to the extent properties are  acquired  in
       2009  and  future years.  Acquisition expenses, which  are
       currently capitalized as Investments in Real Estate,  will
       instead   be  expensed  immediately  as  incurred.    Post
       acquisition,  there will be a subsequent  positive  impact
       on  operations through a reduction in depreciation expense
       over the estimated life of the properties.

                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2008 AND 2007

(3)  Related Party Transactions -

     The  Company owns the percentage interest shown below in the
     following   properties   as   tenants-in-common   with   the
     affiliated entities listed:  Sports Authority store  (40%  -
     AEI  Income & Growth Fund 25 LLC); Advance Auto Parts  store
     (55%  -  AEI  Income  &  Growth  Fund  24  LLC);  Applebee's
     restaurant  in Crawfordsville, Indiana (40% - AEI  Income  &
     Growth Fund XXII Limited Partnership); Best Buy store (30% -
     AEI  Income  & Growth Fund XXI Limited Partnership  and  AEI
     Income  &  Growth  Fund 23 LLC); and Dick's  Sporting  Goods
     store in Fredericksburg, Virginia (27% - AEI Income & Growth
     Fund  23 LLC, AEI Income & Growth Fund 24 LLC and AEI Income
     & Growth Fund 25 LLC).

     AEI,  AFM  and  AEI  Securities, Inc. ("ASI")  received  the
     following  compensation  and reimbursements  for  costs  and
     expenses from the Company:

                                             Total Incurred by the Company
                                            for the Years Ended December 31

                                                         2008       2007
a.AEI and AFM are reimbursed for all costs incurred in
  connection with managing the Company's operations,
  maintaining the Company's books and communicating
  with the Limited Members.                            $ 195,300  $ 117,958
                                                        ========   ========
b.AEI and AFM are reimbursed for all direct expenses they
  have paid on the Company's behalf to third parties
  relating to LLC administration and property
  management.  These expenses included printing costs,
  legal and filing fees, direct administrative costs,
  outside audit costs, taxes, insurance and other
  property  costs.                                     $  36,319  $  22,372
                                                        ========   ========
c.AEI is reimbursed for all costs and direct expenses
  incurred by it in acquiring properties on behalf of
  the Company.                                         $  46,076  $ 111,937
                                                        ========   ========
d.ASI was the underwriter of the Company's offering.  AEI
  Capital Corporation is the sole stockholder of ASI, which
  is a member of the Financial Industry Regulatory Authority
  (FINRA).  ASI received, as underwriting commissions,10%
  for sale of certain subscription Units (a majority of
  this amount was re-allowed to other participating
  broker/dealers).  These  costs  are treated as a
  reduction of members'  capital.                      $       0  $ 924,494
                                                        ========   ========

e.AEI is reimbursed for all costs incurred in
  connection with managing the Company's offering
  and organization.                                    $       0  $ 295,906
                                                        ========   ========

                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2008 AND 2007

(3)  Related Party Transactions - (Continued)

                                               Total Incurred by the Company
                                              for the Years Ended December 31

                                                           2008       2007
f.AEI is reimbursed for all direct expenses it has paid
  on the Company's behalf to third parties relating to
  the offering and organization of the Company.  These
  expenses included printing costs, legal and filing
  fees, direct administrative costs,  underwriting
  costs and due diligence fees.                        $       0  $ 179,398
                                                        ========   ========

     The  payable  to  AEI Fund Management, Inc.  represents  the
     balance due for the services described in 3a, b, c, e and f.
     This balance is non-interest bearing and unsecured and is to
     be paid in the normal course of business.

(4)  Investments in Real Estate -

     The  Company leases its properties to various tenants  under
     net  leases,  classified as operating leases.  Under  a  net
     lease,  the  tenant  is responsible for real  estate  taxes,
     insurance,  maintenance, repairs and operating expenses  for
     the  property.  For some leases, the Company is  responsible
     for  repairs  to the structural components of the  building.
     At  the  time  the properties were acquired,  the  remaining
     primary lease terms varied from 10 to 20 years.  The  leases
     provide  the  tenants with three to four  five-year  renewal
     options  subject  to the same terms and  conditions  as  the
     primary term.

     The   Company's  properties  are  commercial,  single-tenant
     buildings.  The  Sports Authority store was  constructed  in
     1996,  renovated in 2001 and acquired in 2006.  The  Advance
     Auto  Parts  store was constructed in 2004 and  acquired  in
     2006.   The  Applebee's restaurant in Indianapolis,  Indiana
     was   constructed  in  1997  and  acquired  in  2006.    The
     Applebee's   restaurant  in  Crawfordsville,   Indiana   was
     constructed  in  1996 and acquired in 2006.   The  Starbucks
     restaurant was constructed and acquired in 2007.   The  land
     for the Dick's Sporting Goods store was acquired in 2007 and
     construction of the store was completed in 2008.   The  Best
     Buy  store  was constructed in 1990, renovated in  1997  and
     acquired  in 2008.  There have been no costs capitalized  as
     improvements subsequent to the acquisitions.

                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2008 AND 2007

(4)  Investments in Real Estate - (Continued)

     The  cost  of  the properties not held for sale and  related
     accumulated  depreciation  at  December  31,  2008  are   as
     follows:
                                       Buildings and            Accumulated
Property                         Land    Equipment     Total    Depreciation

Advance Auto Parts,
 Middletown,  OH            $  112,315  $  909,974  $ 1,022,289   $  94,031
Applebee's, Indianapolis, IN   889,340   2,164,847    3,054,187     191,986
Applebee's, Crawfordsvlle, IN 337,353     900,418    1,237,771       72,034
Starbucks, Bluffton, IN        344,008     806,108    1,150,116      44,336
Red Robin, Beavercreek, OH   1,533,655           0    1,533,655           0
Best Buy, Eau Claire, WI       474,137   1,547,025    2,021,162      56,724
Dick's Sporting Goods,
  Fredericksburg, VA         1,603,559   1,523,044    3,126,603      38,076
                             ---------   ---------   ----------    --------
                            $5,294,367  $7,851,416  $13,145,783   $ 497,187
                             =========   =========   ==========    ========

     On  August 10, 2007, the Company purchased a Starbucks store
     in Bluffton, Indiana for $1,150,116.  The property is leased
     to  Starbucks  Corporation under a Lease  Agreement  with  a
     remaining  primary term of 10 years and initial annual  rent
     of  $79,800.  In July 2008, Starbucks announced that it  was
     closing  this  store  at  the end of  July.   Starbucks  has
     contacted  the Company to attempt to negotiate an  agreement
     to terminate the Lease.  Unless an agreement is reached, the
     Company  expects Starbucks to comply with all of  its  Lease
     obligations.

     On  December 17, 2007, the Company purchased a 27%  interest
     in   a  parcel  of  land  in  Fredericksburg,  Virginia  for
     $1,374,913.  The Company obtained title to the land  in  the
     form of an undivided fee simple interest in the 27% interest
     purchased.  Simultaneous with the purchase of the land,  the
     Company  entered into a Project Construction and Development
     Financing  Agreement under which the Company advanced  funds
     to  Silver-Honaker Development Company, LLC  ("Silver")  for
     the  construction of a Dick's Sporting Goods  store  on  the
     site.   The Company's share of the total acquisition  costs,
     including the cost of the land, was $3,126,603.

     The  property is leased to Dick's Sporting Goods, Inc. under
     a  Lease  Agreement  with a primary term  of  10  years  and
     initial  annual rent of $219,445 for the interest purchased.
     Pursuant to the Lease, the tenant commenced paying  rent  on
     May 8, 2008.  Pursuant to the development agreement, for the
     period  from  December 17, 2007 through May 7, 2008,  Silver
     paid the Company interest at a rate of 6.75% on the purchase
     price  of the land and the amounts advanced for construction
     of  the  store.  Pursuant to the Lease, any improvements  to
     the land during the term of the Lease become the property of
     the Company.

                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2008 AND 2007

(4)  Investments in Real Estate - (Continued)

     On  December 28, 2007, the Company purchased 2.04  acres  of
     land  in  Beavercreek,  Ohio for $1,533,655.   The  land  is
     leased  to  Red  Robin International,  Inc.  under  a  Lease
     Agreement  with a remaining primary term of 11.3  years  and
     initial  annual  rent of $105,000.  Red Robin International,
     Inc. operates a Red Robin restaurant on the site.  Ownership
     of  the  building  and  improvements will  transfer  to  the
     Company upon termination of the lease.

     On January 31, 2008, the Company purchased a 30% interest in
     a  Best  Buy  store in Eau Claire, Wisconsin for $2,021,162.
     The  property  is leased to Best Buy Stores,  L.P.  under  a
     Lease  Agreement with a remaining primary term of  10  years
     and  initial  annual  rent  of  $142,222  for  the  interest
     purchased.

     For  properties owned as of December 31, 2008,  the  minimum
     future rent payments required by the leases are as follows:

                       2009           $ 1,140,237
                       2010             1,142,862
                       2011             1,148,666
                       2012             1,189,119
                       2013             1,201,276
                       Thereafter       8,513,087
                                       ----------
                                      $14,335,247
                                       ==========

     There were no contingent rents recognized in 2008 and 2007.

(5)  Major Tenants -

     The following schedule presents rent revenue from individual
     tenants,   or  affiliated  groups  of  tenants,   who   each
     contributed  more  than ten percent of the  Company's  total
     rent revenue for the years ended December 31:

      Tenants                       Industry        2008         2007

     Apple American Group          Restaurant   $  309,551    $  309,551
     TSA Stores, Inc.              Retail          204,665       201,564
     Dick's Sporting Goods, Inc.   Retail          142,167           N/A
     Best Buy Stores, L.P.         Retail          130,742           N/A
     Red Robin International, Inc. Restaurant      105,000           N/A
     Advance Stores Company, Inc.  Retail              N/A        71,679
                                                 ----------    ----------
     Aggregate rent revenue of major tenants    $  892,125    $  582,794
                                                 ==========    ==========
     Aggregate rent revenue of major tenants as
     a percentage of total rent revenue                 85%           95%
                                                 ==========    ==========


                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2008 AND 2007

(6)  Discontinued Operations -

     The Company is attempting to sell the Sports Authority store
     in  Wichita,  Kansas.  At December 31, 2008  and  2007,  the
     property was classified as Real Estate Held for Sale with  a
     book value of $2,126,435.

     The  financial  results for this property are  reflected  as
     Discontinued   Operations  in  the  accompanying   financial
     statements.   The following are the results of  discontinued
     operations for the years ended December 31:

                                                      2008         2007

     Rental Income                                 $ 204,665   $ 201,564
     Property Management Expenses                    (14,413)     (4,246)
     Depreciation                                          0     (61,326)
                                                    ---------   ---------
           Income  from Discontinued Operations    $ 190,252   $ 135,992
                                                    =========   =========

(7)  Members' Capital -

     For  the years ended December 31, 2008 and 2007, the Company
     declared    distributions   of   $991,950   and    $695,660,
     respectively.  The Limited Members received distributions of
     $962,192  and  $674,790  and the Managing  Members  received
     distributions  of  $29,758  and  $20,870  for   the   years,
     respectively.  The Limited Members' distributions  represent
     $0.53 and $0.51 per LLC Unit outstanding using 1,832,736 and
     1,327,999   weighted  average  Units  in  2008   and   2007,
     respectively.  The distributions represent $0.32  and  $0.30
     per  Unit  of  Net Income and $0.21 and $0.21  per  Unit  of
     return   of   contributed  capital   in   2008   and   2007,
     respectively.

     Beginning in April 2009, the Company may acquire Units  from
     Limited  Members  who  have  tendered  their  Units  to  the
     Company.   Such  Units may be acquired at a  discount.   The
     Company  will not be obligated to purchase in any year  more
     than  2% of the total number of Units outstanding on January
     1  of such year.  In no event shall the Company be obligated
     to purchase Units if, in the sole discretion of the Managing
     Member,  such purchase would impair the capital or operation
     of the Company.

                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2008 AND 2007

(8)  Income Taxes -

     The   following  is  a  reconciliation  of  net  income  for
     financial reporting purposes to income reported for  federal
     income tax purposes for the years ended December 31:

                                                       2008        2007

     Net  Income for Financial Reporting Purposes   $ 600,530  $ 405,758

     Depreciation for Tax Purposes Under
       Depreciation  for Financial Reporting Purposes  43,269     78,721

     Income Accrued for Tax Purposes Over
      Income for Financial Reporting Purposes          25,796          0
                                                     ---------  ---------
           Taxable Income to Members                $ 669,595  $ 484,479
                                                     =========  =========

     The  following  is a reconciliation of Members'  Equity  for
     financial reporting purposes to Members' Equity reported for
     federal income tax purposes for the years ended December 31:

                                                         2008        2007

     Members'Equity for Financial Reporting Purposes  $14,864,169 $15,255,589

     Depreciation for Tax Purposes Under
      Depreciation for Financial Reporting Purposes       154,701     111,432

     Income Accrued for Tax Purposes Over
      Income for Financial Reporting Purposes              25,796           0

     Organization and Syndication Costs Treated as
      Reduction of Capital for Financial Reporting
      Purposes                                          2,691,997   2,691,997
                                                       ----------  ----------
           Members' Equity for Tax Reporting Purposes $17,736,663 $18,059,018
                                                       ==========  ==========

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
        ACCOUNTING AND FINANCIAL DISCLOSURE.

       None.

ITEM 9AT.CONTROLS AND PROCEDURES.

(a)  Disclosure Controls and Procedures.

        Under  the  supervision  and with  the  participation  of
management, including its President and Chief Financial  Officer,
the Managing Member of the Company evaluated the effectiveness of
the   design  and  operation  of  our  disclosure  controls   and
procedures  (as  defined in Rule 13a-15(e) under  the  Securities
Exchange  Act  of  1934 (the "Exchange Act")).  Based  upon  that
evaluation,  the  President and Chief Financial  Officer  of  the
Managing  Member  concluded that, as of the  end  of  the  period
covered  by  this report, our disclosure controls and  procedures
were  effective  in  ensuring  that information  required  to  be
disclosed  by us in the reports that we file or submit under  the
Exchange  Act  is  recorded, processed, summarized  and  reported
within  the time periods specified in applicable rules and  forms
and  that  such  information is accumulated and  communicated  to
management,  including the President and Chief Financial  Officer
of  the Managing Member, in a manner that allows timely decisions
regarding required disclosure.

       (b)  Internal Control Over Financial Reporting.

       (i) Management's Report on Internal Control Over Financial
Reporting.   The  Managing  Member, through  its  management,  is
responsible  for  establishing and maintaining adequate  internal
control  over  our financial reporting, as defined in  Rule  13a-
15(f) under the Exchange Act, and for performing an assessment of
the   effectiveness  of  our  internal  control  over   financial
reporting  as  of  December  31,  2008.   Internal  control  over
financial  reporting is a process designed to provide  reasonable
assurance  regarding the reliability of financial  reporting  and
the preparation of financial statements for external purposes  in
accordance  with  generally accepted accounting principles.   Our
system  of  internal  control over financial  reporting  includes
those policies and procedures that (i) pertain to the maintenance
of  records  that,  in reasonable detail, accurately  and  fairly
reflect  the transactions and dispositions of the assets  of  the
Company; (ii) provide reasonable assurance that transactions  are
recorded   as  necessary  to  permit  preparation  of   financial
statements  in  accordance  with  generally  accepted  accounting
principles, and that receipts and expenditures of the Company are
being  made  only in accordance with authorizations of management
of  the  Managing Member; and (iii) provide reasonable  assurance
regarding   prevention  or  timely  detection   of   unauthorized
acquisition,  use,  or disposition of the Company's  assets  that
could have a material effect on the financial statements.

        Management of the Managing Member performed an assessment
of  the  effectiveness  of our internal  control  over  financial
reporting as of December 31, 2008 based upon criteria in Internal
Control-Integrated   Framework  issued  by   the   Committee   of
Sponsoring  Organizations  of the Treadway  Commission  ("COSO").
Based  on  our  assessment, management  of  the  Managing  Member
determined that our internal control over financial reporting was
effective  as  of  December 31, 2008 based  on  the  criteria  in
Internal Control-Integrated Framework issued by the COSO.

ITEM 9AT.CONTROLS AND PROCEDURES.  (Continued)

        This annual report does not include an attestation report
of  our  registered  public accounting  firm  regarding  internal
control  over financial reporting.  Management's report  was  not
subject  to attestation by our registered public accounting  firm
pursuant  to  temporary  rules  of the  Securities  and  Exchange
Commission that permit us to provide only management's report  in
this annual report.

         (ii)    Changes  in  Internal  Control  Over   Financial
Reporting.  During the most recent period covered by this report,
there  has  been no change in our internal control over financial
reporting  (as defined in Rule 13a-15(f) under the Exchange  Act)
that  has  materially  affected,  or  is  reasonably  likely   to
materially affect, our internal control over financial reporting.

ITEM 9B.  OTHER INFORMATION.

       None.


                            PART III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

        The registrant is a limited liability company and has  no
officers,  directors, or direct employees.  The Managing  Members
manage  and  control  the  Company's  affairs  and  have  general
responsibility  and  the  ultimate  authority  in   all   matters
affecting the Company's business.  The Managing Members  are  AEI
Fund  Management XXI, Inc. (AFM), the Managing Member, and Robert
P.  Johnson, Chief Executive Officer, President and sole director
of  AFM,  the  Special Managing Member.  AFM is  a  wholly  owned
subsidiary of AEI Capital Corporation of which Mr. Johnson is the
majority   shareholder.   AFM  has  only  one  senior   financial
executive,  its  Chief Financial Officer.   The  Chief  Financial
Officer  reports  directly to Mr. Johnson and is accountable  for
his actions to Mr. Johnson.  Although Mr. Johnson and AFM require
that  all  of  their  personnel, including  the  Chief  Financial
Officer, engage in honest and ethical conduct, ensure full, fair,
accurate, timely, and understandable disclosure, comply with  all
applicable  governmental laws, rules and regulations, and  report
to  Mr. Johnson any deviation from these principles, because  the
organization  is  composed of only approximately 35  individuals,
because  the  management  of a company  by  an  entity  that  has
different  interests in distributions and income  than  investors
involves numerous conflicts of interest that must be resolved  on
a  daily  basis, and because the ultimate decision maker  in  all
instances  is Mr. Johnson, AFM has not adopted a formal  code  of
conduct.   Instead,  the materials pursuant  to  which  investors
purchase Units disclose these conflicts of interest in detail and
Mr.  Johnson,  as  the  CEO and sole director  of  AFM,  resolves
conflicts  to  the  best  of  his ability,  consistent  with  his
fiduciary obligations to AFM and the fiduciary obligations of AFM
to the Company.  The director and officers of AFM are as follows:

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
         (Continued)

        Robert  P.  Johnson, age 64, is Chief Executive  Officer,
President  and  sole director and has held these positions  since
the  formation  of AFM in August 1994, and has  been  elected  to
continue  in these positions until December 2009.  From  1970  to
the  present, he has been employed exclusively in the  investment
industry,  specializing in limited partnership  investments.   In
that capacity, he has been involved in the development, analysis,
marketing   and  management  of  public  and  private  investment
programs investing in net lease properties as well as public  and
private  investment  programs investing  in  energy  development.
Since 1971, Mr. Johnson has been the president, a director and  a
registered principal of AEI Securities, Inc., which is registered
with  the SEC as a securities broker-dealer, is a member  of  the
Financial Industry Regulatory Authority (FINRA) and is  a  member
of  the  Security Investors Protection Corporation  (SIPC).   Mr.
Johnson   has  been  president,  a  director  and  the  principal
shareholder   of  AEI  Fund  Management,  Inc.,  a  real   estate
management  company founded by him, since 1978.  Mr.  Johnson  is
currently  a general partner or principal of the general  partner
in ten limited partnerships and a managing member in five LLCs.

        Patrick  W.  Keene,  age 49, is Chief Financial  Officer,
Treasurer  and  Secretary  and has  held  these  positions  since
January  22,  2003  and  has been elected to  continue  in  these
positions  until December 2009.  Mr. Keene has been  employed  by
AEI  Fund  Management, Inc. and affiliated entities  since  1986.
Prior  to being elected to the positions above, he was Controller
of  the various entities.  From 1982 to 1986, Mr. Keene was  with
KPMG  Peat  Marwick  Certified Public Accountants,  first  as  an
auditor and later as a tax manager.  Mr. Keene is responsible for
all accounting functions of AFM and the registrant.

       Since Mr. Johnson serves as the Special Managing Member of
the  Company,  as well as the sole director of AFM,  all  of  the
duties  that might be assigned to an audit committee are assigned
to  Mr. Johnson.  Mr. Johnson is not an audit committee financial
expert, as defined.  As an officer and majority owner, through  a
parent  company, of AFM, and as the Special Managing Member,  Mr.
Johnson is not a "disinterested director" and may be subject to a
number of conflicts of interests in his capacity as sole director
of AFM.

        Before the independent auditors are engaged, Mr. Johnson,
as the sole director of AFM, approves all audit-related fees, and
all permissible nonaudit fees, for services of our auditors.

Section 16(a) Beneficial Ownership Reporting Compliance

        Under federal securities laws, the directors and officers
of  the Managing Member of the Company, and any beneficial  owner
of  more than 10% of a class of equity securities of the Company,
are  required  to report their ownership of the Company's  equity
securities  and  any changes in such ownership to the  Securities
and  Exchange Commission (the "Commission").  Specific due  dates
for  these  reports have been established by the Commission,  and
the Company is required to disclose in this Annual Report on 10-K
any  delinquent  filing of such reports and any failure  to  file
such  reports  during the fiscal year ended  December  31,  2008.
Based upon information provided by officers and directors of  the
Managing Member, all officers, directors and 10% owners filed all
reports on a timely basis in the 2008 fiscal year.


ITEM 11.  EXECUTIVE COMPENSATION.

        The Managing Member and affiliates are reimbursed at cost
for  all  services performed on behalf of the registrant and  for
all  third party expenses paid on behalf of the registrant.   The
cost  for services performed on behalf of the registrant will  be
actual  time  spent  performing such services  plus  an  overhead
burden.   These  services include organizing the  registrant  and
arranging  for the offer and sale of Units, reviewing  properties
for acquisition and rendering administrative, property management
and  property  sales  services.  The amount and  nature  of  such
payments are detailed in Item 13 of this annual report on Form 10-
K.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
         MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

        The following table sets forth information pertaining  to
the ownership of the Units by each person known by the Company to
beneficially  own  5%  or  more of the Units,  by  each  Managing
Member, and by each officer or director of the Managing Member as
of February 28, 2009:

     Name and Address                   Number of     Percent
   of Beneficial Owner                  Units Held    of Class

   AEI Fund Management XXI, Inc.            0            0%
   Robert P. Johnson                        0            0%
   Patrick W. Keene                         0            0%

   Address for all:
   1300 Wells Fargo Place
   30 East 7th Street, St. Paul, Minnesota 55101

The  Managing Members know of no holders of more than 5%  of  the
outstanding Units.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
         DIRECTOR INDEPENDENCE.

        The  registrant,  AFM  and  its  affiliates  have  common
management and utilize the same facilities.  As a result, certain
administrative  expenses  are  allocated  among   these   related
entities.   All  of  such activities and any  other  transactions
involving the affiliates of the Managing Member of the registrant
are  governed  by,  and  are conducted in  conformity  with,  the
limitations  set  forth  in  the  Operating  Agreement   of   the
registrant.   Reference  is  made to  Note  3  of  the  Financial
Statements,   as  presented,  and  is  incorporated   herein   by
reference,  for  details of related party  transactions  for  the
years ended December 31, 2008 and 2007.

        Neither  the registrant, nor the Managing Member  of  the
registrant,  has a board of directors consisting of  any  members
who are "independent."  The sole director of the Managing Member,
Robert  P.  Johnson, is also the Special Managing Member  of  the
registrant,  and is the Chief Executive Officer,  and  indirectly
the  principal owner, of the Managing Member.  Accordingly, there
is  no  disinterested  board,  or other  functioning  body,  that
reviews  related party transactions, or the transactions  between
the  registrant and the Managing Members, except as performed  in
connection with the audit of its financial statements.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
         DIRECTOR INDEPENDENCE.  (Continued)

        The  limitations  included  in  the  Operating  Agreement
require  that  the  cumulative  reimbursements  to  the  Managing
Members and their affiliates for certain expenses will not exceed
an  amount  equal to the sum of (i) 20% of capital contributions,
(ii)  1% of gross revenues, plus an initial leasing fee of 3%  of
gross  revenues for the first five years of the original term  of
each lease, (iii) 3% of Net Proceeds of Sale, and (iv) 10% of Net
Cash  Flow  less  the Net Cash Flow actually distributed  to  the
Managing Members. The cumulative reimbursements subject  to  this
limitation  are reimbursements for (i) organization and  offering
expenses,  including  commissions and an Organization  Fee,  (ii)
acquisition expenses paid with proceeds from the initial offering
of  Units,  (iii)  services  provided  in  the  sales  effort  of
properties, and (iv) expenses of controlling persons and overhead
expenses  directly  attributable  to  the  forgoing  services  or
attributable  to  administrative services.  As  of  December  31,
2008, these cumulative reimbursements to the Managing Members and
their affiliates did not exceed the limitation amount.

        The following table sets forth the forms of compensation,
distributions  and cost reimbursements paid by the registrant  to
the  Managing Members or their Affiliates in connection with  the
operation  of  the Fund and its properties for  the  period  from
inception through December 31, 2008.

Person or Entity                                      Amount Incurred From
 Receiving                  Form and Method        Inception (March 14, 2005)
Compensation                of Compensation           To December 31, 2008

AEI Securities, Inc.  Selling Commissions equal to 10%        $1,790,447
                      of proceeds, excluding proceeds
                      from distribution reinvestments,
                      most  of  which were reallowed
                      to  Participating Dealers.

Managing Members      Reimbursement at Cost for other         $  916,368
and Affiliates        Organization and Offering Costs.

Managing Members      Reimbursement at Cost for all           $  278,726
and Affiliates        Acquisition Expenses.

Managing Members      Reimbursement at Cost for all           $  353,465
and Affiliates        Administrative Expenses attributable
                      to the Fund, including all expenses
                      related to management of the Fund's
                      properties and  all  other  transfer
                      agency, reporting, Member relations
                      and other administrative functions.

Managing Members      Reimbursement at Cost for all expenses  $        0
and Affiliates        related to the disposition of the Fund's
                      properties.

Managing Members      3% of Net Cash Flow in any fiscal year. $   55,970

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
          DIRECTOR INDEPENDENCE.  (Continued)

Person or Entity                                      Amount Incurred From
 Receiving                  Form and Method        Inception (March 14, 2005)
Compensation                of Compensation           To December 31, 2008

Managing Members      1% of distributions of Net Proceeds     $        0
                      of Sale until Limited Members have
                      received an amount equal to (a) their
                      Adjusted Capital Contributions,  plus
                      (b) an amount equal to 6.5% of their
                      Adjusted Capital Contributions per
                      annum, cumulative but not compounded,
                      to the extent not previously distributed.
                      10%  of  distributions of Net Proceeds
                      of Sale thereafter.

ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES.

        The  following  is a summary of the fees  billed  to  the
Company   by  Boulay,  Heutmaker,  Zibell  &  Co.  P.L.L.P.   for
professional  services rendered for the years ended December  31,
2008 and 2007:

     Fee Category                            2008       2007

     Audit Fees                           $  15,000   $ 16,400
     Audit-Related Fees                           0          0
     Tax Fees                                     0          0
     All Other Fees                               0          0
                                           ---------   --------
     Total Fees                           $  15,000   $ 16,400
                                           =========   ========

Audit  Fees  - Consists of fees billed for professional  services
rendered   for  the  audit  of  the  Company's  annual  financial
statements   and  review  of  the  interim  financial  statements
included  in  quarterly reports, and services that  are  normally
provided   by  Boulay,  Heutmaker,  Zibell  &  Co.  P.L.L.P.   in
connection with statutory and regulatory filings or engagements.

Audit-Related  Fees - Consists of fees billed for  assurance  and
related  services that are reasonably related to the  performance
of  the  audit  or  review of financial statements  and  are  not
reported under "Audit Fees." These services include consultations
concerning financial accounting and reporting standards.

Tax  Fees - Consists of fees billed for professional services for
federal and state tax compliance, tax advice and tax planning.

All Other Fees - Consists of fees for products and services other
than the services reported above.

Policy   for  Preapproval  of  Audit  and  Permissible  Non-Audit
Services of Independent Auditors

       Before the Independent Auditors are engaged by the Company
to render audit or non-audit services, the engagement is approved
by Mr. Johnson acting as the Company's audit committee.
                             PART IV

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

       (a) (1) A list of the financial statements contained
               herein is set forth on page 12.

       (a) (2) Schedules are omitted because of the absence of
               conditions under which they are required or because
               the required information is presented in the
               financial statements or related notes.

       (a) (3) The Exhibits filed in response to Item 601 of
               Regulation S-K are listed below.

    3.1   Certificate of Limited Liability Company  (incorporated
    by  reference to Exhibit 3.1 of the registrant's Registration
    Statement on Form SB-2 filed on May 26, 2005 [File  No.  333-
    125266]).

    3.2   Operating Agreement to the Prospectus (incorporated  by
    reference  to  Exhibit  A  of  the registrant's  Registration
    Statement  on Form SB-2 filed on October 14, 2005  [File  No.
    333-125266]).

    10.1  Assignment and Assumption of Lease and  Guaranty  dated
    April  3,  2006  between the Company and AEI Fund  Management
    XVII,  Inc.  relating  to  the Property  at  6959  East  21st
    Street,   Wichita,  Kansas  (incorporated  by  reference   to
    Exhibit 10.1 of Form 8-K filed April 5, 2006).

    10.2  Assignment and Assumption of Lease dated May  31,  2006
    between  the  Company, AEI Income & Growth Fund  24  LLC  and
    Blue  Bell Partners, LLC relating to the Property at 65 North
    University  Boulevard,  Middletown,  Ohio  (incorporated   by
    reference to Exhibit 10.2 of Form 8-K filed June 7, 2006).

    10.3  Net  Lease Agreement dated September 21,  2006  between
    the  Company,  AEI  Fund  Management  XVII,  Inc.  and  Apple
    Indiana   II  LLC  relating  to  the  Property  at  7345   E.
    Washington  Street,  Indianapolis, Indiana  (incorporated  by
    reference  to  Exhibit 10.2 of Form 8-K filed  September  26,
    2006).

    10.4  Assignment and Assumption of Lease dated  December  29,
    2006  between  the  Company, AEI Income &  Growth  Fund  XXII
    Limited  Partnership  and  AEI  Fund  Management  XVII,  Inc.
    relating  to  the  Property at 1516 South Washington  Street,
    Crawfordsville,   Indiana  (incorporated  by   reference   to
    Exhibit 10.1 of Form 8-K filed January 8, 2007).

    31.1  Certification  of Chief Executive Officer  of  Managing
    Member  pursuant to Rule 15d-14(a)(17 CFR 240.15d-14(a))  and
    Section 302 of the Sarbanes-Oxley Act of 2002.

    31.2  Certification  of Chief Financial Officer  of  Managing
    Member  pursuant to Rule 15d-14(a)(17 CFR 240.15d-14(a))  and
    Section 302 of the Sarbanes-Oxley Act of 2002.

    32    Certification  of  Chief Executive  Officer  and  Chief
    Financial Officer of Managing Member pursuant to Section  906
    of the Sarbanes-Oxley Act of 2002.


                           SIGNATURES

       Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant duly caused  this
report  to  be signed on its behalf by the undersigned, thereunto
duly authorized.


                          AEI INCOME & GROWTH FUND 26
                          Limited Liability Company
                          By: AEI Fund Management XXI, Inc.
                              Its Managing Member


March 26, 2009            By: /s/ Robert P Johnson
                                  Robert P. Johnson, President and Director
                                  (Principal Executive Officer)


        Pursuant  to the requirements of the Securities  Exchange
Act  of  1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and  on
the dates indicated.

 Name                            Title                             Date


/s/Robert P Johnson  President (Principal Executive  Officer)  March 26, 2009
   Robert P.Johnson  and Sole Director of Managing Member


/s/Patrick W Keene   Chief Financial Officer  and  Treasurer   March 26, 2009
   Patrick W. Keene  (Principal Accounting Officer)