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

                            FORM 10-Q

        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
             OF THE SECURITIES EXCHANGE ACT OF 1934

       For the quarterly period ended:  September 30, 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)

                       Not Applicable
 (Former name, former address and former fiscal year, if changed
                       since last report)

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

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 Exchange  Act).  Yes  [X] No


                 AEI INCOME & GROWTH FUND 26 LLC

                              INDEX


Part I - Financial Information

 Item 1. Financial Statements:

         Balance Sheet as of September 30, 2008 and December  31, 2007

         Statements for the Periods ended September 30, 2008 and 2007:

           Income

           Cash Flows

           Changes in Members' Equity (Deficit)

         Notes to Financial Statements

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

 Item 3. Quantitative and Qualitative Disclosures About Market Risk

 Item 4T.Controls and Procedures

Part II - Other Information

 Item 1. Legal Proceedings

 Item 1A.Risk  Factors

 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 Item 3. Defaults Upon Senior Securities

 Item 4. Submission of Matters to a Vote of Security Holders

 Item 5. Other Information

 Item 6. Exhibits

         Signatures

<PAGE>
                 AEI INCOME & GROWTH FUND 26 LLC
                          BALANCE SHEET
            SEPTEMBER 30, 2008 AND DECEMBER 31, 2007

                             ASSETS
                                                   2008           2007
CURRENT ASSETS:
  Cash and Cash Equivalents                    $   402,716    $ 4,249,562
  Receivables                                            0          4,102
                                                -----------    -----------
      Total Current Assets                         402,716      4,253,664
                                                -----------    -----------
INVESTMENTS IN REAL ESTATE:
  Land                                           5,290,800      4,629,110
  Buildings and Equipment                        7,845,430      4,781,347
  Accumulated Depreciation                        (418,542)      (211,133)
                                                -----------    -----------
                                                12,717,688      9,199,324
  Real Estate Held for Sale                      2,126,435      2,126,435
                                                -----------    -----------
      Net Investments in Real Estate            14,844,123     11,325,759
                                                -----------    -----------
           Total  Assets                       $15,246,839    $15,579,423
                                                ===========    ===========

                     LIABILITIES AND MEMBERS' EQUITY

CURRENT LIABILITIES:
  Payable to AEI Fund Management, Inc.         $     7,892    $    90,239
  Distributions Payable                            247,987        233,595
  Unearned Rent                                     12,623              0
                                                -----------    -----------
      Total Current Liabilities                    268,502        323,834
                                                -----------    -----------
MEMBERS' EQUITY (DEFICIT):
  Managing Members                                 (18,292)        (9,975)
  Limited Members, $10 per Unit;
   10,000,000 Units authorized;
   1,832,736  Units issued and outstanding      14,996,629     15,265,564
                                                -----------    -----------
      Total Members' Equity                     14,978,337     15,255,589
                                                -----------    -----------
        Total Liabilities and Members' Equity  $15,246,839    $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 PERIODS ENDED SEPTEMBER 30


                                 Three Months Ended       Nine Months Ended
                               9/30/08       9/30/07    9/30/08      9/30/07

RENTAL INCOME                $  231,923   $  106,676   $  607,014  $  297,291

EXPENSES:
   LLC  Administration -
    Affiliates                   42,557       33,395      128,835      82,780
   LLC Administration
    and Property Management  -
    Unrelated Parties             6,127        3,033       24,509      12,556
   Depreciation                  78,455       43,781      207,409     123,285
                              ----------   ----------   ----------  ----------
        Total Expenses          127,139       80,209      360,753     218,621
                              ----------   ----------   ----------  ----------

OPERATING INCOME                104,784       26,467      246,261      78,670

OTHER INCOME:
   Interest Income                1,525       51,027       73,549      96,054
                              ----------   ----------   ----------  ----------
INCOME FROM CONTINUING
   OPERATIONS                   106,309       77,494      319,810     174,724

Income from Discontinued
  Operations                     50,161       35,045      146,900     100,156
                              ----------   ----------   ----------  ----------
NET  INCOME                  $  156,470   $  112,539   $  466,710  $  274,880
                              ==========   ==========   ==========  ==========
NET INCOME ALLOCATED:
   Managing Members          $    4,694   $    3,376   $   14,001  $    8,246
   Limited Members              151,776      109,163      452,709     266,634
                              ----------   ----------   ----------  ----------
                             $  156,470   $  112,539   $  466,710  $  274,880
                              ==========   ==========   ==========  ==========
NET INCOME PER LLC UNIT:
   Continuing Operations     $      .06   $      .05   $      .17  $      .14
   Discontinued Operations          .02          .03          .08         .08
                              ----------   ----------   ----------  ----------
        Total                $      .08   $      .08   $      .25  $      .22
                              ==========   ==========   ==========  ==========
Weighted Average Units
  Outstanding                 1,832,736    1,427,123    1,832,736   1,195,210
                              ==========   ==========   ==========  ==========


 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 NINE MONTHS ENDED SEPTEMBER 30


                                                       2008          2007

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net Income                                     $   466,710   $   274,880

   Adjustments To Reconcile Net Income
   To Net Cash Provided By Operating Activities:
     Depreciation                                     207,409       169,281
     Decrease in Receivables                            4,102             0
     Decrease in Payable to
        AEI Fund Management, Inc.                     (82,347)      (56,746)
     Increase in Unearned Rent                         12,623             0
                                                   -----------   -----------
        Total Adjustments                             141,787       112,535
                                                   -----------   -----------
        Net Cash Provided By
            Operating Activities                      608,497       387,415
                                                   -----------   -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Investments in Real Estate                     (3,725,773)   (1,149,809)
                                                   -----------   -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Capital Contributions from Limited Members               0     6,480,429
   Organization and Syndication Costs                       0      (945,949)
   Increase in Distributions Payable                   14,392        95,988
   Distributions to Members                          (743,962)     (462,065)
                                                   -----------   -----------
        Net Cash Provided By (Used For)
            Financing Activities                     (729,570)    5,168,403
                                                   -----------   -----------
NET INCREASE (DECREASE) IN CASH
    AND CASH EQUIVALENTS                           (3,846,846)    4,406,009

CASH AND CASH EQUIVALENTS, beginning of period      4,249,562       151,644
                                                   -----------   -----------
CASH AND CASH EQUIVALENTS, end of period          $   402,716   $ 4,557,653
                                                   ===========   ===========

 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 NINE MONTHS ENDED SEPTEMBER 30


                                                                    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     6,480,429    6,480,429    648,042.9

  Organization and
    Syndication Costs                0      (945,949)    (945,949)

  Distributions                (13,862)     (448,203)    (462,065)

  Net Income                     8,246       266,634      274,880
                               --------   -----------  ----------- -----------
BALANCE, September 30, 2007   $ (6,894)  $12,793,387  $12,786,493  1,530,169.7
                               ========   ===========  =========== ===========


BALANCE, December 31, 2007    $ (9,975)  $15,265,564  $15,255,589  1,832,736.0

  Distributions                (22,318)     (721,644)    (743,962)

  Net Income                    14,001       452,709      466,710
                               --------   -----------  ----------- -----------
BALANCE, September 30, 2008   $(18,292)  $14,996,629  $14,978,337  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
                       SEPTEMBER 30, 2008

(1)  The  condensed  statements included herein have been  prepared
     by  the  registrant, without audit, pursuant to the rules  and
     regulations  of  the Securities and Exchange  Commission,  and
     reflect   all  adjustments  which  are,  in  the  opinion   of
     management,  necessary to a fair statement of the  results  of
     operations for the interim period, on a basis consistent  with
     the  annual audited statements.  The adjustments made to these
     condensed   statements  consist  only  of   normal   recurring
     adjustments.   Certain information, accounting  policies,  and
     footnote    disclosures   normally   included   in   financial
     statements  prepared  in  accordance with  generally  accepted
     accounting principles have been condensed or omitted  pursuant
     to   such  rules  and  regulations,  although  the  registrant
     believes  that  the  disclosures  are  adequate  to  make  the
     information  presented not misleading.  It is  suggested  that
     these  condensed financial statements be read  in  conjunction
     with  the  financial statements and the summary of significant
     accounting  policies  and  notes  thereto  included   in   the
     registrant's latest annual report on Form 10-KSB.

(2)  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.

                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)

(2)  Organization - (Continued)

     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.

     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.

(3)  Reclassification -

     Certain  items  related to discontinued  operations  in  the
     prior  period's financial statements have been  reclassified
     to  conform  to  2008 presentation.  These reclassifications
     had no effect on Members' capital, net income or cash flows.



                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)

(4)  Investments in Real Estate -

     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  $3,121,837.   The
     remaining  interests in the property were purchased  by  AEI
     Income & Growth Fund 23 LLC, AEI Income & Growth Fund 24 LLC
     and  AEI  Income  &  Growth Fund 25 LLC, affiliates  of  the
     Company.

     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.

     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 $2,016,375.
     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.   The  remaining interests in the  property  were
     purchased   by  AEI  Income  &  Growth  Fund   XXI   Limited
     Partnership and AEI Income & Growth Fund 23 LLC,  affiliates
     of the Company.


                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)

(5)  Payable to AEI Fund Management, Inc. -

     AEI  Fund  Management, Inc. performs the administrative  and
     operating  functions for the Company.  The  payable  to  AEI
     Fund   Management  represents  the  balance  due  for  those
     services.    This  balance  is  non-interest   bearing   and
     unsecured  and  is  to  be  paid in  the  normal  course  of
     business.

(6)  Discontinued Operations -

     The Company is attempting to sell the Sports Authority store
     in  Wichita, Kansas.  At September 30, 2008 and December 31,
     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 periods ended September 30:

                                Three Months Ended       Nine Months Ended
                               9/30/08      9/30/07    9/30/08      9/30/07

 Rental Income                $  51,167   $  51,167  $ 153,499   $ 150,398
 Property Management Expenses    (1,006)       (790)    (6,599)     (4,246)
 Depreciation                         0     (15,332)         0     (45,996)
                               ---------   ---------  ---------   ---------
 Income from Discontinued
   Operations                 $  50,161   $  35,045  $ 146,900   $ 100,156
                               =========   =========  =========   =========

(7)  Recently Issued Accounting Pronouncements -

     In  December 2007, the Financial Accounting Standards  Board
     issued  Statement  of  Financial  Accounting  Standards  No.
     141(R)  ("SFAS 141(R)"), Business Combinations.  SFAS 141(R)
     requires,  among other things, the expensing of acquisition-
     related transaction costs.  Management anticipates that SFAS
     141(R) will be effective for property acquisitions completed
     on  or after January 1, 2009.  Management is evaluating  the
     effect  that  the adoption of SFAS 141(R) will have  on  the
     Company's results of operations, financial position, and the
     related disclosures.


                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)

(7)  Recently Issued Accounting Pronouncements - (Continued)

     In  September 2006, the Financial Accounting Standards Board
     issued  Statement of Financial Accounting Standards No.  157
     ("SFAS  157"),  Fair Value Measurements.  SFAS  157  defines
     fair  value,  establishes  a framework  for  measuring  fair
     value,   and   expands   disclosures   about   fair    value
     measurements.  The statement is effective for (1)  financial
     assets  and  liabilities in financial statements issued  for
     fiscal  years beginning after November 15, 2007, and interim
     periods  within  those  fiscal years and  (2)  certain  non-
     financial  assets  and  liabilities in financial  statements
     issued  for fiscal years beginning after November 15,  2008,
     and interim periods within those fiscal years.  When testing
     for  recoverability of properties under SFAS 144, Accounting
     for   Impairment  or  Disposal  of  Long-Lived  Assets,  the
     provisions  of  this statement are used when comparing  fair
     value  to  carrying  value.  Management  is  evaluating  the
     effect  that  the  adoption of SFAS 157  will  have  on  the
     Company's results of operations, financial position, and the
     related disclosures.

ITEM 2. 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.


The 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.


ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS.  (Continued)

        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.

        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 nine months ended September 30, 2008, the Company
recognized rental income from continuing operations of  $607,014,
representing nine months rent from five properties and rent  from
two  properties acquired during the period.  For the nine  months
ended September 30, 2007, the Company recognized rental income of
$297,291, representing nine months rent from three properties and
rent from one property acquired during the period.

       For the nine months ended September 30, 2008 and 2007, the
Company  incurred  LLC  administration expenses  from  affiliated
parties   of   $128,835   and   $82,780,   respectively.    These
administration  expenses  include  costs  associated   with   the
management of the properties, processing distributions, reporting
requirements  and correspondence to the Limited Members.   During
the  same  periods,  the Company incurred LLC administration  and
property  management expenses from unrelated parties  of  $24,509
and  $12,556,  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.

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS.  (Continued)

       For the nine months ended September 30, 2008 and 2007, the
Company  recognized  interest  income  of  $73,549  and  $96,054,
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 rates  in  2008.
This  decrease  was  partially offset by interest  received  from
construction advances.

        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 nine months ended September
30,   2008,  the  Company  recognized  income  from  discontinued
operations  of $146,900 representing rental income less  property
management  expenses.  For the nine months  ended  September  30,
2007,  the Company recognized income from discontinued operations
of  $100,156 representing rental income less property  management
expenses and depreciation.

        The  Company  is attempting to sell the Sports  Authority
store in Wichita, Kansas.  At September 30, 2008 and December 31,
2007,  the property was classified as Real Estate Held  for  Sale
with a book value of $2,126,435.

        Inflation  has  had  a  minimal  effect  on  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.   In addition, leases may contain  rent  clauses
which  entitle the Company to receive additional rent  in  future
years if gross receipts for the property exceed certain specified
amounts.   Increases  in sales volumes of  the  tenants,  due  to
inflation  and  real sales growth, may 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 $608,497 of cash from  operations
during the nine months ended September 30, 2008, representing net
income  of  $466,710  and  a non-cash  expense  of  $207,409  for
depreciation, which was partially offset by $65,622 in net timing
differences  in the collection of payments from the  tenants  and
the  payment of expenses.  The Company generated $387,415 of cash
from  operations during the nine months ended September 30, 2007,
representing  net  income of $274,880 and a non-cash  expense  of
$169,281  for  depreciation, which were  partially  offset  by  a
$56,746 decrease in the payable to the Company's managers.


ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS.  (Continued)

        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 nine  months  ended
September 30, 2008, the Company expended $3,725,773 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 $2,016,375.  Also during  the
period,   the  Company  paid  $1,709,398,  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 nine months ended September
30, 2007, the Company's real estate expenditures were $1,149,809.

       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.

        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  nine  months ended September 30,  2008  and  2007,  the
Company   declared  distributions  of  $743,962   and   $462,065,
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.


ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

       Not applicable.

ITEM 4T.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)  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.


                   PART II - OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS.

        There are no material pending legal proceedings to  which
the  Company  is  a party or of which the Company's  property  is
subject.

ITEM 1A.RISK FACTORS.

       Not applicable.

                   PART II - OTHER INFORMATION
                           (Continued)

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

       (a) None.

       (b) Not applicable.

        (c)  Beginning in March 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
period  covered by this report, the Company did not purchase  any
Units.

ITEM 3.DEFAULTS UPON SENIOR SECURITIES.

      None.

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

      None

ITEM 5.OTHER INFORMATION.

      None.

ITEM 6.EXHIBITS

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


Dated:  November 7, 2008      AEI Income & Growth Fund 26 LLC
                              By:  AEI Fund Management XXI, Inc.
                              Its: Managing Member



                              By: ROBERT P JOHNSON
                                  ROBERT P JOHNSON
                                  President
                                  (Principal Executive Officer)



                              By: PATRICK W KEENE
                                  PATRICK W KEENE
                                  Chief Financial Officer
                                  (Principal Accounting Officer)