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:  June 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 June 30, 2008 and December 31,  2007

         Statements for the Periods ended June 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
               JUNE 30, 2008 AND DECEMBER 31, 2007

                             ASSETS
                                                      2008          2007
CURRENT ASSETS:
  Cash  and Cash Equivalents                     $   572,304    $ 4,249,562
  Receivables                                            288          4,102
                                                  -----------    -----------
      Total Current Assets                           572,592      4,253,664
                                                  -----------    -----------
INVESTMENTS IN REAL ESTATE:
  Land                                             5,290,737      4,629,110
  Buildings and Equipment                          7,845,370      4,781,347
  Accumulated Depreciation                          (340,087)      (211,133)
                                                  -----------    -----------
                                                  12,796,020      9,199,324
  Real Estate Held for Sale                        2,126,435      2,126,435
                                                  -----------    -----------
      Net Investments in Real Estate              14,922,455     11,325,759
                                                  -----------    -----------
           Total  Assets                         $15,495,047    $15,579,423
                                                  ===========    ===========

                         LIABILITIES AND MEMBERS' EQUITY

CURRENT LIABILITIES:
  Payable to AEI Fund Management, Inc.           $    20,510    $    90,239
  Distributions Payable                              247,988        233,595
  Unearned Rent                                       33,687              0
  Construction Costs Payable                         123,008              0
                                                  -----------    -----------
      Total Current Liabilities                      425,193        323,834
                                                  -----------    -----------
MEMBERS' EQUITY (DEFICIT):
  Managing Members                                   (15,547)        (9,975)
  Limited Members, $10 per Unit;
   10,000,000 Units authorized;
   1,832,736  Units issued and outstanding        15,085,401     15,265,564
                                                  -----------    -----------
      Total Members' Equity                       15,069,854     15,255,589
                                                  -----------    -----------
        Total Liabilities and Members' Equity    $15,495,047    $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 JUNE 30


                                Three Months Ended       Six Months Ended
                              6/30/08       6/30/07    6/30/08      6/30/07

RENTAL INCOME               $  209,508  $   95,307   $  375,091   $  190,615

EXPENSES:
    LLC  Administration -
      Affiliates                43,309      26,628       86,278       49,385
    LLC Administration and
      Property  Management  -
      Unrelated Parties          6,676       4,204       18,382        9,523
    Depreciation                70,858      39,752      128,954       79,504
                             ---------   ---------    ---------    ---------
        Total Expenses         120,843      70,584      233,614      138,412
                             ---------   ---------    ---------    ---------

OPERATING INCOME                88,665      24,723      141,477       52,203

OTHER INCOME:
   Interest Income              20,620      35,358       72,024       45,027
                             ---------   ---------    ---------    ---------
INCOME FROM CONTINUING
   OPERATIONS                  109,285      60,081      213,501       97,230

Income from Discontinued
  Operations                    45,723      32,534       96,739       65,111
                             ---------   ---------    ---------    ---------
NET  INCOME                 $  155,008  $   92,615   $  310,240   $  162,341
                             =========   =========    =========    =========
NET INCOME ALLOCATED:
   Managing Members         $    4,650  $    2,778   $    9,307   $    4,870
   Limited Members             150,358      89,837      300,933      157,471
                             ---------   ---------    ---------    ---------
                            $  155,008  $   92,615   $  310,240   $  162,341
                             =========   =========    =========    =========
NET INCOME PER LLC UNIT:
   Continuing Operations    $      .06  $      .05   $      .11   $      .09
   Discontinued Operations         .02         .03          .05          .06
                             ---------   ---------    ---------    ---------
        Total               $      .08  $      .08   $      .16   $      .15
                             =========   =========    =========    =========
Weighted  Average  Units
  Outstanding                1,832,736   1,198,264    1,832,736    1,079,253
                             =========   =========    =========    =========


 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 SIX MONTHS ENDED JUNE 30


                                                       2008           2007
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net Income                                     $   310,240    $   162,341

   Adjustments To Reconcile Net Income
   To Net Cash Provided By Operating Activities:
     Depreciation                                     128,954        110,168
     (Increase) Decrease in Receivables                 3,814         (2,390)
     Decrease in Payable to
        AEI Fund Management, Inc.                     (69,729)       (48,558)
     Increase in Unearned Rent                         33,687          5,973
                                                   -----------    -----------
        Total Adjustments                              96,726         65,193
                                                   -----------    -----------
        Net Cash Provided By
            Operating Activities                      406,966        227,534
                                                   -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Investments in Real  Estate                  (3,602,642)             0
                                                   -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Capital  Contributions from  Limited  Members            0      4,838,469
   Organization and Syndication Costs                       0       (709,751)
   Increase in Distributions Payable                   14,393         66,496
   Distributions to Members                          (495,975)      (278,158)
                                                   -----------    -----------
        Net Cash Provided By (Used For)
            Financing Activities                     (481,582)     3,917,056
                                                   -----------    -----------
NET INCREASE (DECREASE) IN CASH
    AND CASH EQUIVALENTS                           (3,677,258)     4,144,590

CASH  AND  CASH EQUIVALENTS, beginning of period    4,249,562        151,644
                                                   -----------    -----------
CASH AND CASH EQUIVALENTS, end of period          $   572,304    $ 4,296,234
                                                   ===========    ===========

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES:
    Capitalized Construction Costs
    Payable at Period End                         $   123,008    $         0
                                                   ===========    ===========

 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 SIX MONTHS ENDED JUNE 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      4,838,469     4,838,469    483,846.9

  Organization and
    Syndication Costs             0       (709,751)     (709,751)

  Distributions              (8,345)      (269,813)     (278,158)

  Net Income                  4,870        157,471       162,341
                            --------    -----------   -----------  -----------
BALANCE, June 30, 2007     $ (4,753)   $11,456,852   $11,452,099   1,365,973.7
                            ========    ===========   ===========  ===========


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

  Distributions             (14,879)      (481,096)     (495,975)

  Net Income                  9,307        300,933       310,240
                            --------    -----------   -----------  -----------
BALANCE, June 30, 2008     $(15,547)   $15,085,401   $15,069,854   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
                          JUNE 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.   At  June 30, 2008, the balance due for  construction
     costs  was $123,008, which was subsequently paid to  Silver.
     The   Company's  share  of  the  total  acquisition   costs,
     including  the  cost  of  the  land,  was  $3,121,714.   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.  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.   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 -

     In  May 2008, the Company entered into an agreement to  sell
     its  40%  interest in the Sports Authority store in Wichita,
     Kansas  to  an  unrelated  third party.   If  the  sale  was
     completed,  the Company would have received net proceeds  of
     approximately $2,944,000.  In June 2008, the buyer cancelled
     the agreement.  The Company is seeking another buyer for the
     property  and  may  not  be  able to  negotiate  a  purchase
     agreement with similar economic terms.  At June 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 June 30:


                             Three Months Ended       Six Months Ended
                            6/30/08      6/30/07     6/30/08     6/30/07

 Rental Income              $  51,166   $ 51,166   $ 102,332   $ 99,231
 Property Management Expenses  (5,443)    (3,300)     (5,593)    (3,456)
 Depreciation                       0    (15,332)          0    (30,664)
                             ---------   --------   ---------   --------
 Income from Discontinued
   Operations               $  45,723   $ 32,534   $  96,739   $ 65,111
                             =========   ========   =========   ========

(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.

ITEM  2. MANAGEMENT'S  DISCUSSION  AND  ANALYSIS   OF   FINANCIAL
         CONDITION  AND RESULTS OF OPERATIONS.

        The Management's Discussion and Analysis contains various
"forward  looking  statements"  within  the  meaning  of  federal
securities  laws  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 made by the Company,
must 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.

        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.

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

        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  six  months ended June 30,  2008,  the  Company
recognized rental income from continuing operations of  $375,091,
representing six months rent from five properties and  rent  from
two  properties acquired during the period.  For the  six  months
ended  June  30,  2007, the Company recognized rental  income  of
$190,615, representing six months rent from three properties.

        For  the  six  months ended June 30, 2008 and  2007,  the
Company  incurred  LLC  administration expenses  from  affiliated
parties   of   $86,278   and   $49,385,   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  $18,382
and   $9,523,  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  six  months ended June 30, 2008 and  2007,  the
Company  recognized  interest  income  of  $72,024  and  $45,027,
respectively.   In  2008, interest income increased  due  to  the
Company  receiving  interest  from construction  advances.   This
increase  was  partially offset by a reduction  in  money  market
interest due to the Company having less money invested in a money
market  account  due  to property acquisitions  and  lower  money
market rates 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 six months ended  June  30,
2008,  the Company recognized income from discontinued operations
of  $96,739  representing rental income less property  management
expenses.   For the six months ended June 30, 2007,  the  Company
recognized   income  from  discontinued  operations  of   $65,111
representing rental income less property management expenses  and
depreciation.

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

       In May 2008, the Company entered into an agreement to sell
its 40% interest in the Sports Authority store in Wichita, Kansas
to  an  unrelated  third party.  If the sale was  completed,  the
Company   would  have  received  net  proceeds  of  approximately
$2,944,000.   In  June 2008, the buyer cancelled  the  agreement.
The Company is seeking another buyer for the property and may not
be  able  to negotiate a purchase agreement with similar economic
terms.  At June 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 $406,966 of cash from  operations
during  the  six  months  ended June 30, 2008,  representing  net
income  of  $310,240  and  a non-cash  expense  of  $128,954  for
depreciation, which was partially offset by $32,228 in net timing
differences  in the collection of payments from the  tenants  and
the  payment of expenses.  The Company generated $227,534 of cash
from  operations  during  the six months  ended  June  30,  2007,
representing  net  income of $162,341 and a non-cash  expense  of
$110,168 for depreciation, which were partially offset by $44,975
of  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 six months ended  June
30,  2008,  the  Company expended $3,602,642 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 $1,586,267, including acquisition expenses, for
the   construction  of  the  Dick's  Sporting  Goods   store   in
Fredericksburg, Virginia.

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

       During the six months ended June 30, 2007, the Company did
not purchase any real properties.  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.

        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  six  months ended June 30, 2008 and 2007,  the  Company
declared  distributions  of $495,975 and $278,158,  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.

        Until capital is invested in properties, the Company will
remain   extremely   liquid.   After   completion   of   property
acquisitions, the Company will attempt to maintain a cash reserve
of  only  approximately  .5% of subscription  proceeds.   Because
properties  are purchased for cash and leased under  net  leases,
this is considered adequate to satisfy most contingencies.

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.

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:  August 8, 2008        AEI Income & Growth Fund 26 LLC
                              By:  AEI Fund Management XXI, Inc.
                              Its: Managing Member



                              By: /s/ Robert P Johnson
                                      Robert P. Johnson
                                      President
                                      (Principal Executive Officer)



                              By: /s/ Patrick W Keene
                                      Patrick W. Keene
                                      Chief Financial Officer
                                      (Principal Accounting Officer)