UNITED STATES
                  SECURITIES AND EXCHANGE COMMISSION
                        WASHINGTON, DC.  20549
                                   
                               FORM 10-Q
                                   
(Mark One)

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

For the quarterly period ended        September 30, 1997
                               ---------------------------------------    
                                  or

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

For the transition period from ______________________ to _____________

Commission file number                  0-14645
                       -----------------------------------------------
                    DIVERSIFIED HISTORIC INVESTORS II
----------------------------------------------------------------------
        (Exact name of registrant as specified in its charter)

       Pennsylvania                                   23-2361261
-------------------------------                   --------------------
(State or other jurisdiction of                       (I.R.S. Employer
incorporation or organization                      Identification No.)

        Suite 500, 1521 Locust Street, Philadelphia, PA   19102
----------------------------------------------------------------------
   (Address of principal executive offices)              (Zip Code)

Registrant's telephone number, including area code  (215) 735-5001

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

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

Item 1.        Financial Statements.

             Consolidated Balance Sheets - September 30, 1997
             (unaudited) and December 31, 1996
             Consolidated Statements of Operations - Three Months and
             Nine Months Ended September 30, 1997 and 1996 (unaudited)
             Consolidated Statements of Cash Flows - Nine Months Ended
             September 30, 1997 and 1996 (unaudited)
             Notes to Consolidated Financial Statements (unaudited)

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

               (1)  Liquidity

                     As of September 30, 1997, Registrant had cash  of
$196,542.   Such funds are expected to be used to pay the  liabilities
of  the Registrant and to fund cash deficits of the properties.   Cash
generated from operations is used primarily to fund operating expenses
and  debt  service.   If  cash flow proves  to  be  insufficient,  the
Registrant  will  attempt  to negotiate loan  modifications  with  the
various  lenders  in order to remain current on all obligations.   The
Registrant is not aware of any additional sources of liquidity.

                      As   of  September  30,  1997,  Registrant   had
restricted  cash  of $846,995 consisting primarily of  funds  held  as
security  deposits,  replacement reserves and escrows  for  taxes  and
insurance.  As a consequence of the restrictions as to use, Registrant
does not deem these funds to be a source of liquidity.

                     In  recent  years  the  Registrant  has  realized
significant losses, including the foreclosure of one property, due  to
the  properties'  inability to generate sufficient cash  flow  to  pay
their  operating expenses and debt service.  At the present time,  all
three  remaining  properties are able to pay their operating  expenses
and debt service but it is unlikely that any cash will be available to
the Registrant to pay its general and administrative expenses.  In the
legal proceeding involving Morrison Clark, if Capital Bank executes on
its   judgment  against  the  Registrant,  it  is  expected  to   have
significant  impact on the Registrant's liquidity as no cash  will  be
available to pay the operating expenses of the properties.   See  Part
II. Item 1.  Legal Proceedings.

                     It  is the Registrant's intention to continue  to
hold  the properties until they can no longer meet their debt  service
requirements and the properties are foreclosed, or the market value of
the  properties increases to a point where they can be sold at a price
which  is  sufficient to repay the underlying indebtedness  (principal
plus accrued interest).

               (2)  Capital Resources

                     Due  to the relatively recent rehabilitations  of
the   properties,  any  capital  expenditures  needed  are   generally
replacement  items  and  are funded out of  cash  from  operations  or
replacement  reserves, if any.  The Registrant is  not  aware  of  any
factors which would cause historical capital expenditure levels not to
be  indicative of capital requirements in the future and  accordingly,
does  not  believe that it will have to commit material  resources  to
capital investment for the foreseeable future.

               (3)  Results of Operations

                     During  the  third  quarter of  1997,  Registrant
incurred a net loss of $566,650 ($27.24 per limited partnership  unit)
compared  to  a  net loss of $682,498 ($32.81 per limited  partnership
unit) for the same period in 1996.  For the first nine months of 1997,
the  Registrant incurred a net loss of $2,218,885 ($106.67 per limited
partnership  unit)  compared to a net loss of $2,010,967  ($96.68  per
limited partnership unit) for the same period in 1996.

                    Rental income increased $31,873 from $1,122,119 in
the third quarter of 1996 to $1,153,992 in the same period in 1997 and
increased $115,985 from $3,229,976 for the first nine months  of  1996
to  $3,345,961  in  the same period on 1997.  The increase  in  rental
income in both the third quarter and the first nine months of 1997  as
compared  to  the  same periods in 1996 is mainly  the  result  of  an
increase  in residential rental income at Tindeco Wharf and Washington
Square due to an increase in the average rental rates.

                    Hotel income decreased $4,674 from $322,393 in the
third  quarter  of  1996 to $317,719 in the same period  in  1997  and
decreased $24,984 from $983,794 for the first nine months of  1996  to
$958,810  for  the  same period in 1997.  The  decreases  are  due  to
decreases in occupancy in the third quarter (76% to 74%) and  for  the
first  nine months (79% to 74%) of 1997 partially offset by  increases
in  average  room rates in the third quarter ($103.68 to $104.82)  and
for the first nine months ($100.68 to $104.42) of 1997 as compared  to
the same periods in 1996.

                    Expense for rental operations decreased by $10,579
from  $467,846 in the third quarter of 1996 to $457,267  in  the  same
period  in 1997.  The decrease from the third quarter of 1996  to  the
same  period in 1997 is the result of a decrease in utilities  expense
at  Tindeco  Wharf  due  to  a decrease in  the  average  consumption,
partially  offset by an increase in maintenance expense at  Washington
Square  due to deferred maintenance performed in the third quarter  of
1997.

                     Expense  for rental operations increased  $21,789
from  $1,333,661 for the first nine months of 1996 to  $1,355,450  for
the  same period in 1997.  The increase from the first nine months  of
1996  to  the same period in 1997 is the result an increase  in  legal
fees  at  Tindeco  Wharf  due  to  a review  of  the  underlying  loan
documents, partially offset by a decrease at Washington Square due  to
decreased  maintenance and utilities expense resulting from  inclement
weather in the winter of 1996.

                     Hotel operations expense decreased $128,970  from
$413,194  in the third quarter of 1996 to $284,224 in the same  period
in  1997.   The decrease from the third quarter of 1996  to  the  same
period  in 1997 is the result of a decrease in commissions,  rent  and
management fee expense at Factors Walk.  Commissions expense decreased
due  to the execution of a lease in the first quarter of 1996, between
FWP  and  the building adjacent to it with the intention of  expanding
the  River  Street  Inn,  while  rent expense  decreased  due  to  the
assignment  of  the  lease with respect to the  adjacent  property  to
another  entity  which  will develop that  property.   Management  fee
expense  decreased  due to a change in the management  contract  which
allows for a management fee based on a fixed percentage of revenues.

                     Hotel  operations expense decreased $84,100  from
$1,183,846  for  the first nine months of 1996 to $1,099,746  for  the
same  period in 1997. The decrease from the first nine months of  1996
to the same period in 1997 is the result of a decrease in commissions,
rent  and  management fee expense partially offset by an  increase  in
administrative  expenses. Commissions expense  decreased  due  to  the
execution of a lease in the first quarter of 1996, between FWP and the
building  adjacent  to it with the intention of  expanding  the  River
Street Inn, while rent expense decreased due to the assignment of  the
lease  with  respect to the adjacent property to another entity  which
will develop that property.  Management fee expense decreased due to a
change  in  the management contract which allows for a management  fee
based  on  a  fixed  percentage of revenues.   Administrative  expense
increased due to a misapplication of payments on a note payable  where
the payments should have been classified as administrative expenses.

                     Interest expense increased $51,185 from  $782,066
in  the  third quarter of 1996 to $833,251 in the same period in  1997
and  increased $364,010 from $2,320,097 for the first nine  months  of
1996  to  $2,684,107  for the same period in 1997.   The  increase  in
interest  expense for the third quarter and the first nine  months  of
1997 as compared to the same periods in 1996 is due to an increase  in
the  principal  balance upon which interest is calculated  at  Tindeco
Wharf and an increase in the interest rate at Factor's Walk.

                      Losses  incurred  during  the  quarter  at   the
Registrant's three properties amounted to $532,000, compared to a loss
of  approximately $557,000 for the same period in 1996.  For the first
nine  months  of 1997 the Registrant's three properties  recognized  a
loss  of $1,965,000 compared to approximately $1,657,000 for the  same
period in 1996.

                     In the third quarter of 1997, Registrant incurred
a loss of $330,000 at Tindeco Wharf including $288,000 of depreciation
and  amortization expense, compared to a loss of $368,000 in the third
quarter  of  1996, including $288,000 of depreciation and amortization
expense.   The decreased loss from the third quarter of  1996  to  the
same period in 1997 is the result of an increase in residential rental
income due to an increase in the average rental rates combined with  a
decrease  in  utilities  expense due to  a  decrease  in  the  average
consumption  partially  offset  by an increase  in  interest  expense.
Interest expense increased due to an increase in the principal balance
upon which interest is calculated.

                     For  the  first  nine months of 1997,  Registrant
incurred  a loss of $1,136,000 at Tindeco Wharf including $853,000  of
depreciation  and  amortization  expense,  compared  to  a   loss   of
$1,154,000  for  the  same  period  in  1995,  including  $864,000  of
depreciation and amortization expense.  The decrease in the loss  from
the first nine months of 1996 to the same period in 1997 is the result
of  an increase in residential rental income due to an increase in the
average  rental rates combined with a decrease in depreciation expense
partially  offset by an increase in interest expense and  legal  fees.
Depreciation  expense  decreased due to the fact  that  some  personal
property  became  fully  depreciation in the first  quarter  of  1997.
Interest expense increased due to an increase in the principal balance
upon which interest is calculated and legal fees increased due to fees
incurred in connection with a review of the underlying loan documents.

                     In the third quarter of 1997, Registrant incurred
a  loss  of  $190,000  at The River Street Inn  including  $93,000  of
depreciation expense, compared to a loss of $186,000 including $89,000
of  depreciation expense in the third quarter of 1996.  The  increased
loss from the third quarter of 1996 to the same period in 1997 is  the
result  of  a  decrease in hotel income combined with an  increase  in
interest and amortization expenses partially offset by an increase  in
rental  income and a decrease in commissions, rent and management  fee
expense.   Hotel income decreased due to a decrease in occupancy  (76%
to  74%)  partially offset by a slight increase in  the  average  room
rates  ($103.68 to $104.82) and interest expense increased due  to  an
increase in the interest rate.  Amortization expense increased due  to
the  amortization of leasing commissions.  Rental income increased due
to  an increase in the average occupancy of the commercial space  (90%
to  92%).  Commissions expense decreased in 1997 primarily as a result
of  an increase in commissions expense in 1996 due to the execution of
a  lease  by FWP with respect to the building adjacent to it with  the
intention  of expanding the River Street Inn.  Rent expense  decreased
due  to  the  assignment  of the lease with respect  to  the  adjacent
property   to  another  entity  which  will  develop  that   property.
Management  fee  expense decreased due to a change in  the  management
contract which allows for a management fee based on a fixed percentage
of revenues.

                     For  the  first  nine months of 1997,  Registrant
incurred a loss of $822,000 at The River Street Inn including $278,000
of  depreciation expense, compared to a loss of $480,000 for the  same
period  in  1996,  including  $266,000 of depreciation  expense.   The
increased  loss from the first nine months of 1996 to the same  period
in  1997 is the result of a decrease in hotel income combined with  an
increase   in  interest,  administrative  and  amortization   expenses
partially  offset by an increase in rental income and  a  decrease  in
commissions, rent and management fee expense.  Hotel income  decreased
due  to  a  decrease in occupancy (79% to 74%) partially offset  by  a
slight  increase  in the average room rates ($100.68 to  $104.42)  and
interest  expense increased due to an increase in the  interest  rate.
Administrative expense increased due to a misapplication  of  payments
on  a  note payable where the payments should have been classified  as
administrative  expenses while amortization expense increased  due  to
the  amortization of leasing commissions.  Rental income increased due
to  an  increase in the average rental rates of the commercial  space.
Commissions expense decreased due to the execution of a lease  in  the
first  quarter  of 1996, between FWP and the building adjacent  to  it
with  the  intention  of expanding the River Street  Inn,  while  rent
expense  decreased due to the assignment of the lease with respect  to
the  adjacent  property  to another entity  which  will  develop  that
property.   Management fee expense decreased due to a  change  in  the
management contract which allows for a management fee based on a fixed
percentage of revenues.

                     In the third quarter of 1997, Registrant incurred
a   loss  of  $12,000  at  Washington  Square,  including  $28,000  of
depreciation  expense, compared to a loss of $3,000 including  $28,000
of depreciation expense in the third quarter of 1996.  The increase in
the loss from the third quarter of 1996 to the same period in 1997  is
the  result  of  an increase in maintenance expense  due  to  deferred
maintenance performed in the third quarter of 1997.

                     For  the  first  nine months of 1997,  Registrant
incurred  a  loss of $7,000 at Washington Square including $83,000  of
depreciation  expense,  compared to a loss of  $23,000  for  the  same
period  in  1996,  including  $83,000 of  depreciation  expense.   The
decrease  in the loss from the first nine months of 1996 to  the  same
period  in  1997  is due to an increase in rental  income  due  to  an
increase  in  the  average rental rates combined with  a  decrease  in
rental operations expense.  Rental operations expense decreased due to
a  decrease in maintenance and utilities expense which had been higher
then normal in the winter of 1996 as a result of the inclement weather
experienced that period.
<PAGE>

                   DIVERSIFIED HISTORIC INVESTORS II
                 (a Pennsylvania limited partnership)
                                   
                      CONSOLIDATED BALANCE SHEETS
                                   
                                   
                                Assets

                                      September 30, 1997      December 31, 1996
                                          (Unaudited)
Rental properties, at cost:                                           
Land                                      $   934,582             $   934,582
Buildings and improvements                 39,733,425              39,577,198
Furniture and fixtures                      2,740,645               2,740,645
                                           ----------              ----------
                                           43,408,652              43,252,425
Less - Accumulated depreciation           (19,069,849)            (17,857,486)
                                           ----------              ----------
                                           24,338,803              25,394,939
                                                                      
Cash and cash equivalents                     196,542                  79,567
Restricted cash                               846,995               1,300,767
Accounts and notes receivable                  75,088                  47,497
Other assets (net of amortization of                            
$281,092 and $239,940 at September 30,                            
1997 and December 31, 1996, respectively)   1,934,900               1,811,146
                                           ----------              ---------- 
       Total                              $27,392,328             $28,633,916
                                           ==========              ==========
                   Liabilities and Partners' Equity

Liabilities:
Debt obligations                          $32,409,460             $33,087,679
Accounts payable:                                                    
       Trade                                2,532,459               2,208,559
       Related parties                        883,853                 611,243
Interest payable                            9,418,954               8,313,125
Accrued liabilities                         1,220,697               1,278,532
Tenant security deposits                      247,689                 236,677
                                           ----------              ----------
       Total liabilities                   46,713,112              45,735,815
                                           ----------              ----------
Partners' equity                          (19,320,784)            (17,101,899)
                                           ----------              ---------- 
       Total                              $27,392,328             $28,633,916
                                           ==========              ========== 

The accompanying notes are an integral part of these financial statements.
<PAGE>

                  DIVERSIFIED HISTORIC INVESTORS II
                 (a Pennsylvania limited partnership)
                                   
                 CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months and Nine Months Ended September 30, 1997 and 1996
                              (Unaudited)

                                    Three months              Nine months
                                ended September 30,       ended September 30,
                                 1997        1996          1997         1996
                                ------      ------        ------       ------ 

Revenues:           
 Rental income               $1,153,992   $1,122,119   $3,345,961   $3,229,976
 Hotel income                   317,719      322,393      958,810      983,794
 Interest income                  7,294        3,322       18,320       14,210
                              ---------    ---------    ---------    --------- 
   Total revenues             1,479,005    1,447,834    4,323,091    4,227,980
                              ---------    ---------    ---------    --------- 
Costs and expenses:         
 Rental operations              457,267      467,846    1,355,450    1,333,661
 Hotel operations               284,224      413,194    1,099,746    1,183,846
 General and                                                         
   administrative                49,500       49,500      148,500      148,500
 Interest                       833,251      782,066    2,684,107    2,320,097
 Depreciation and                                              
   amortization                 421,413      417,726    1,254,173    1,252,843
                              ---------    ---------    ---------    ---------
   Total costs and                    
       expenses               2,045,655    2,130,332    6,541,976    6,238,947
                              ---------    ---------    ---------    --------- 
Net loss                    ($  566,650) ($  682,498) ($2,218,885) ($2,010,967)
                              =========    =========    =========    =========
Net loss per limited     
 partnership unit           ($    27.24) ($    32.81) ($   106.67) ($    96.68)
                              =========    =========    =========    ========= 

The accompanying notes are an integral part of these financial statements.
<PAGE>

                   DIVERSIFIED HISTORIC INVESTORS II
                 (a Pennsylvania limited partnership)
                                   
                 CONSOLIDATED STATEMENTS OF CASH FLOWS
         For the Nine Months Ended September 30, 1997 and 1996
                              (Unaudited)

                                                          Nine months ended
                                                            September 30,
                                                        1997          1996
Cash flows from operating activities:                  ------        ------ 
 Net loss                                           ($2,218,885)  ($2,010,967)
 Adjustments to reconcile net loss to net cash 
   provided by operating activities:
Depreciation and amortization                         1,254,173     1,252,843
Changes in assets and liabilities:                                            
 Decrease (increase) in restricted cash                 453,772      (307,501)
 (Increase) decrease in accounts receivable             (27,591)       21,225
 Increase in other assets                              (165,564)      (36,122)
 Increase in accounts payable - trade                   323,900     1,235,601
 Increase (decrease) in accounts payable -
   related parties                                      272,610       (45,517)
 Increase in interest payable                         1,105,829     1,070,519
 Decrease in accrued liabilities                        (57,835)     (919,688)
 Increase in tenant security deposits                    11,012           953
                                                      ---------     --------- 
 Net cash provided by operating activities              951,421       261,346
                                                      ---------     --------- 
Cash flows from investing activities:                                         
 Capital expenditures                                  (156,227)     (214,712)
                                                      ---------     --------- 
Net cash used in investing activities                  (156,227)     (214,712)
                                                      ---------     ---------
Cash flows from financing activities:                                         
 Principal payments                                    (678,219)     (114,383)
                                                      ---------     --------- 
 Net cash used in financing activities                 (678,219)     (114,383)
                                                      ---------     ---------
Increase (decrease) in cash and cash equivalents        116,975       (67,749)
                                                                              
Cash and cash equivalents at beginning of period         79,567       114,922
                                                      ---------     ---------
Cash and cash equivalents at end of period           $  196,542    $   47,173
                                                      =========     =========  
Supplemental Disclosure of Cash Flow Information:                             
 Cash paid for interest                              $1,578,278    $1,067,470

The accompanying notes are an integral part of these financial statements.
<PAGE>
                   DIVERSIFIED HISTORIC INVESTORS II
                 (a Pennsylvania limited partnership)

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              (Unaudited)


NOTE 1 - BASIS OF PRESENTATION

The   unaudited  consolidated  financial  statements  of   Diversified
Historic  Investors II (the "Registrant") and related notes have  been
prepared  pursuant to the rules and regulations of the Securities  and
Exchange  Commission.  Accordingly, certain information  and  footnote
disclosures  normally  included in financial  statements  prepared  in
accordance  with  generally accepted accounting principles  have  been
omitted  pursuant  to  such rules and regulations.   The  accompanying
consolidated financial statements and related notes should be read  in
conjunction with the audited financial statements in Form 10-K of  the
Registrant, and notes thereto, for the year ended December 31, 1996.

The  information furnished reflects, in the opinion of management, all
adjustments, consisting of normal recurring accruals, necessary for  a
fair presentation of the results of the interim periods presented.

                      PART II - OTHER INFORMATION

Item 1.        Legal Proceedings

                In May 1992, a Partnership 69% owned by the Registrant
filed  a  reorganization petition pursuant to Chapter 11 of  the  U.S.
Bankruptcy Code to forestall foreclosure on the property owned  by  it
by  a  lender.   In  addition, the lender filed a  claim  against  the
Registrant  on  its  guaranty of payment of both notes.   In  February
1993,  the lender, with permission of the bankruptcy court, foreclosed
on  the property.  In November 1993, the lender obtained a judgment in
the matter of Capital Bank, N.A. v. Diversified Historic Investors  II
in  the  amount  of  $1,800,000.  In return for  payment  of  $20,000,
Capital  Bank  has agreed to forebear from executing on  the  judgment
until July 6, 1998.

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

                No matter was submitted during the quarter covered  by
this report to a vote of security holders.

Item 6.        Exhibits and Reports on Form 8-K

               (a)  Exhibit   Document
                    Number

                      3       Registrant's  Amended and Restated  Certificate
                              of   Limited   Partnership  and  Agreement   of
                              Limited  Partnership, previously filed as  part
                              of    Amendment    No.   2   of    Registrant's
                              Registration  Statement  on  Form   S-11,   are
                              incorporated herein by reference.
                                                
                     21       Subsidiaries  of the Registrant are  listed  in
                              Item  2.  Properties on Form  10-K,  previously
                              filed and incorporated herein by reference.

               (b)  Reports on Form 8-K:

                    No  reports  were  filed  on  Form  8-K  during  the
                    quarter ended September 30, 1997.
<PAGE>
                               SIGNATURES

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

Date:  November 14, 1997       DIVERSIFIED HISTORIC INVESTORS II
       -----------------
                               By: Dover Historic Advisors, General Partner
                                         
                                   By: EPK, Inc., Partner
                                                  
                                       By:  /s/ Donna M. Zanghi
                                            ----------------------------
                                            DONNA M. ZANGHI,
                                            Vice President and Secretary