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, 1996
                              ----------------------------------------        
                                  or

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

For the transition period from                        to
                              ------------------------  -------------- 
Commission file 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       No   X
                                        ------   ------
<PAGE>
                    PART I - FINANCIAL INFORMATION

Item 1.        Financial Statements.

             Consolidated Balance Sheets - September 30, 1996
             (unaudited) and December 31, 1995
             Consolidated Statements of Operations - Three Months and
             Nine Months Ended September 30, 1996 and 1995 (unaudited)
             Consolidated Statements of Cash Flows - Nine Months Ended
             September 30, 1996 and 1995 (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, 1996, Registrant had cash  of
$47,173.  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,  1996,  Registrant   had
restricted  cash  of $999,528 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 Factor's Walk, if the final outcome were to
be adverse to the Registrant, the property could be foreclosed.  If  a
foreclosure  were  to occur, it is not likely to  have  a  significant
impact  on  the Registrant's liquidity, as this property has generated
little  or  no cash flow to the Registrant.  In addition,  if  Capital
Bank  executes on its judgment against the Registrant, it is  expected
to  have  significant impact on the Registrant's liquidity  since  the
judgment  amount  is  substantially  in  excess  of  the  Registrant's
available cash  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.  In the first  quarter  of  1996,  the
Registrant's  wholly-owned affiliate, Factor's Walk  Partners  ("FWP")
entered  into a lease with the owner of the building adjacent  to  the
River  Street  Inn (owned by FWP) with the intention of expanding  the
inn.   The  source of financing for this expansion has  not  yet  been
identified and the expansion has been deferred until financing can  be
arranged.   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  1996,  Registrant
incurred a net loss of $682,498 ($32.81 per limited partnership  unit)
compared  to  a  net loss of $632,288 ($30.40 per limited  partnership
unit) for the same period in 1995.  For the first nine months of 1996,
the  Registrant incurred a net loss of $2,010,967 ($96.68 per  limited
partnership  unit)  compared to a net loss of $1,827,804  ($87.87  per
limited partnership unit) for the same period in 1995.

                    Rental income increased $58,746 from $1,063,643 in
the third quarter of 1995 to $1,122,119 in the same period in 1996 and
increased $152,699 from $3,077,277 for the first nine months  of  1995
to  $3,229,976  in  the same period on 1996.  The increase  in  rental
income in both the third quarter and the first nine months of 1996  as
compared  to  the  same periods in 1995 is mainly  the  result  of  an
increase  in  residential rental income at Tindeco  Wharf  due  to  an
increase  in  the average rental rates.  Also, in the  third  quarter,
rental income at Washington Square increased due to an increase in the
average rental rates.

                     Hotel  income increased $26,446 from $295,947  in
the  third quarter of 1995 to $322,393 in the same period in 1996  and
increased $51,476 from $932,318 for the first nine months of  1995  to
$983,794  for  the  same period in 1996.  The  increases  are  due  to
increases  in the average room rates ($94.55 to $103.68) in the  third
quarter  and  ($93.20  to  $100.66) for the first  nine  months  while
occupancy remained constant.

                     Expense for rental operations increased by $1,861
from  $465,985 in the third quarter of 1995 to $467,846  in  the  same
period  in  1996 and increased $91,456 from $1,242,205 for  the  first
nine  months  of 1995 to $1,333,661 for the same period in  1996.  The
increases  from  both the third quarter and the first nine  months  of
1995  to  the  same periods in 1996 is the result of  an  increase  in
rental operations expense such as maintenance and utilities expense at
Washington Square resulting from the inclement weather experienced  in
the  winter  of 1996 and an increase in management and legal  fees  at
Tindeco  Wharf.   Management fees increased due  to  the  increase  in
rental  income  and  legal  fees increased due  to  fees  incurred  in
connection  with the approval by the Department of Housing  and  Urban
Development of a new management agreement.

                     Hotel operations expense increased $136,514  from
$276,680  in the third quarter of 1995 to $413,194 in the same  period
in 1996 and increased $287,771 from $896,075 for the first nine months
of  1995 to $1,183,846 for the same period in 1996. The increase  from
the  third  quarter  and the first nine months of  1995  to  the  same
periods in 1996 is the result of an increase in rent, commissions, and
management fees expense.  Rent expense increased due to the  execution
of  a  lease  between FWP and the building adjacent  to  it  with  the
intention  of  expanding  the River Street Inn.   Commissions  expense
increased due to commissions incurred as a result of the extension  of
several  of  the commercial tenants' leases and the execution  of  the
lease of the adjacent building and management fees increased due to an
increase in hotel income.

                    Interest expense decreased $4,406 from $786,472 in
the  third quarter of 1995 to $782,066 in the same period in 1996  due
to a decrease in the variable interest rate (4.4% to 3.9%) at Factor's
Walk.

                     Interest expense increased $3,985 from $2,316,112
for the first nine months of 1995 to $2,320,097 for the same period in
1996.   The increase in interest expense for the first nine months  of
1996  as compared to the same period in 1995 is due to an increase  in
the  principal  balance upon which interest is calculated  at  Tindeco
Wharf,  partially  offset by the decreased interest rate  at  Factor's
Walk as referred to above.

                      Losses  incurred  during  the  quarter  at   the
Registrant's three properties amounted to $557,000, compared to a loss
of  approximately $518,000 for the same period in 1995.  For the first
nine  months  of 1996 the Registrant's three properties  recognized  a
loss  of $1,657,000 compared to approximately $1,485,000 for the  same
period in 1995.

                     In the third quarter of 1996, Registrant incurred
a loss of $368,000 at Tindeco Wharf including $288,000 of depreciation
and  amortization expense, compared to a loss of $383,000 in the third
quarter  of  1995, including $287,000 of depreciation and amortization
expense  and for the first nine months of 1996, Registrant incurred  a
loss of $1,154,000 including $864,000 of depreciation and amortization
expense, compared to a loss of $1,182,000 for the same period in 1995,
including  $863,000  of  depreciation and amortization  expense.   The
decreased  loss from both the third quarter and the first nine  months
of  1995  to the same periods in 1996 is the result of an increase  in
residential  rental  income due to an increase in the  average  rental
rates  partially offset by an increase in management fees,  legal  and
interest  expense.  Management fees increased due to the  increase  in
rental  income.  and  legal fees increased due  to  fees  incurred  in
connection  with  the  approval by HUD of a new management  agreement.
Interest expense increased due to an increase in the principal balance
upon which interest is calculated.

                     In the third quarter of 1996, Registrant incurred
a  loss  of  $186,000  at The River Street Inn  including  $89,000  of
depreciation expense, compared to a loss of $101,000 including $89,000
of depreciation expense in the third quarter of 1995 and for the first
nine  months of 1996, Registrant incurred a loss of $480,000 including
$266,000  of depreciation expense, compared to a loss of $285,000  for
the  same  period in 1995, including $266,000 of depreciation expense.
The increased loss from the third quarter and the first nine months of
1995  to  the  same periods in 1996 is the result of  an  increase  in
commissions, rent, and management fees expense partially offset by  an
increase in hotel income and a decrease in interest expense due  to  a
decrease  in  the variable interest rate (4.4% to 3.9%).   Commissions
expense  increased  due to commissions incurred as  a  result  of  the
extension of several of the commercial tenant leases and the execution
of the lease in the first quarter of 1996.  Rent expense increased due
to  the execution of a lease between FWP and the building adjacent  to
it  with  the intention of expanding the River Street Inn.  Management
fees  increased due to the increase in hotel income while hotel income
increased  due  to  an increase in the average room rates  ($94.55  to
$103.68)  in the third quarter and ($93.20 to $100.66) for  the  first
nine months while occupancy remained constant.

                     In the third quarter of 1996, Registrant incurred
a   loss  of  $3,000  at  Washington  Square,  including  $28,000   of
depreciation expense, compared to a loss of $34,000 including  $28,000
of depreciation expense in the third quarter of 1995.  The decrease in
the loss from the third quarter of 1995 to the same period in 1996  is
the  result  of  an increase in rental income due to  an  increase  in
average rental rates combined with a decrease in maintenance expense.

                     For  the  first  nine months of 1996,  Registrant
incurred  a loss of $23,000 at Washington Square including $83,000  of
depreciation  expense,  compared to a loss of  $18,000  for  the  same
period  in  1995,  including  $83,000 of  depreciation  expense.   The
increase  in the loss from the first nine months of 1995 to  the  same
period in 1996 is due to an increase in rental operations expense such
as  maintenance  and  utilities expense resulting from  the  inclement
weather experienced in the winter of 1996.
<PAGE>
<TABLE>
                   DIVERSIFIED HISTORIC INVESTORS II
                 (a Pennsylvania limited partnership)
                                   
                      CONSOLIDATED BALANCE SHEETS
                                   
                                   
                                Assets
<CAPTION>
                                                  September 30, 1996        December 31, 1995
                                                      (Unaudited)
                                                  ------------------        -----------------
Rental properties, at cost:                                                                  
<S>                                                   <C>                      <C>     
Land                                                  $      934,582           $      934,582
Buildings and improvements                                39,628,844               39,414,132
Furniture and fixtures                                     2,650,472                2,650,472
                                                        ------------            -------------
                                                          43,213,898               42,999,186
Less - Accumulated depreciation                          (17,435,531)             (16,210,001)
                                                        ------------            -------------
                                                          25,778,367               26,789,185
                                                                                             
Cash and cash equivalents                                     47,173                  114,922
Restricted cash                                              999,528                  692,027
Accounts and notes receivable                                 28,805                   50,030
Other   assets  (net  of  amortization   of                                                   
$207,154  and  $180,216 at  September  30,                                                   
1996 and December 31, 1995, respectively)                                                    
                                                           1,781,293                1,772,484
                                                         -----------              -----------    
       Total                                            $ 28,635,166             $ 29,418,648
                                                         ===========              ===========
                   Liabilities and Partners' Equity

Liabilities:
Debt obligations                                        $33,046,916             $33,161,299
Accounts payable:                                                                          
       Trade                                              2,102,338                 866,737
       Related parties                                      633,052                 678,569
Interest payable                                          7,999,076               6,928,557
Accrued liabilities                                       1,461,809               2,381,497
Tenant security deposits                                    242,657                 241,704
                                                        -----------             -----------                              
       Total liabilities                                 45,485,848              44,258,363
                                                                                           
Partners' equity                                        (16,850,682)            (14,839,715)
                                                        -----------             -----------                                       
       Total                                           $ 28,635,166            $ 29,418,648
                                                        ===========             ===========

The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
                   DIVERSIFIED HISTORIC INVESTORS II
                 (a Pennsylvania limited partnership)
                                   
                 CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months and Nine Months Ended September 30, 1996 and 1995
                              (Unaudited)
<CAPTION>
                                             Three months                              Nine months
                                          ended September 30,                       ended September 30,
                                         1996              1995                 1996                1995
                                       --------          --------             --------            --------               
Revenues:                                                                                                
<S>                                   <C>                <C>                 <C>                <C>
 Rental income                        $1,122,119         $1,063,643          $3,229,976         $3,077,277
 Hotel income                            322,393            295,947             983,794            932,318
 Interest income                           3,322              4,288              14,210             18,001
                                       ---------          ---------           ---------          ---------
   Total revenues                      1,447,834          1,363,878           4,227,980          4,027,596

Costs and expenses:                                                                                      
 Rental operations                       467,846            465,985           1,333,661          1,242,205
 Hotel operations                        413,194            276,680           1,183,846            896,075
 General and                                                                                              
   administrative                         49,500             49,500             148,500            148,500
 Interest                                782,066            786,472           2,320,097          2,316,112
 Depreciation and                                                                                         
   amortization                          417,726            417,529           1,252,843          1,252,508
                                       ---------          ---------           ---------          ---------
 Total costs and                                                                                       
            expenses                   2,130,332          1,996,166           6,238,947          5,855,400
                                       ---------          ---------           ---------          ---------
Net loss                             ($  682,498)       ($  632,288)        ($2,010,967)       ($1,827,804)
                                       =========          =========           =========          =========
Net loss per limited                                                                                     
 partnership unit                  ($      32.81)     ($      30.40)     ($       96.68)     ($      87.87)
                                                                                                         
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>

                   DIVERSIFIED HISTORIC INVESTORS II
                 (a Pennsylvania limited partnership)
                                   
                 CONSOLIDATED STATEMENTS OF CASH FLOWS
         For the Nine Months Ended September 30, 1996 and 1995
                              (Unaudited)
<CAPTION>
                                                                   Nine months ended
                                                                     September 30,
                                                                     1996         1995
                                                                   --------     --------
Cash flows from operating activities:                                                         
<S>                                                             <C>               <C>
 Net loss                                                        ($2,010,967)      ($1,827,804)
 Adjustments to reconcile net loss to net cash provided                                       
by operating activities:
Depreciation and amortization                                      1,252,843         1,252,508
Changes in assets and liabilities:                                                            
 (Increase) decrease in restricted cash                             (307,501)           43,752
 Decrease (increase) in accounts receivable                           21,225            (8,992)
 Increase in other assets                                            (36,122)          (28,727)
 Increase in accounts payable - trade                              1,235,601            99,110
 Decrease in accounts payable - related parties                      (45,517)         (154,357)
 Increase in interest payable                                      1,070,519           783,970
 (Decrease) increase in accrued liabilities                         (919,688)          279,128
 Increase (decrease) in tenant security deposits                         953            (3,533)
                                                                   ---------          --------
Net cash provided by operating activities                           261,346           435,035
                                                                   ---------          --------                           
Cash flows from investing activities:                                                         
 Capital expenditures                                               (214,712)         (157,371)
                                                                   ---------          --------                 
Net cash used in investing activities                               (214,712)         (157,371)
                                                                   ---------          --------                
Cash flows from financing activities:                                                          
 Principal payments                                                 (114,383)         (270,408)
                                                                   ---------          --------                 
 Net cash used in financing activities                              (114,383)         (270,408)
                                                                   ---------          --------
(Decrease) increase in cash and cash equivalents                     (67,749)            7,256
                                                                                              
Cash and cash equivalents at beginning of period                     114,922           101,340
                                                                   ---------          --------                                  
Cash and cash equivalents at end of period                      $     47,173      $    108,596
                                                                   =========          ========                           
Supplemental Disclosure of Cash Flow Information:                                             
 Cash paid for interest                                           $1,067,470        $1,132,130

The accompanying notes are an integral part of these financial statements.
</TABLE>
<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, 1995.

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

The Registrant has been involved in two legal proceedings as discussed
below:

                 (a)   J.  A.  Jones  Construction  Company  ("Jones")
contracted  with Factor's Walk Partners ("FWP") for the renovation  of
what  was  originally a warehouse, into the River Street  Inn/Factor's
Walk.   During  construction,  numerous  disputes  arose  between  the
parties.   As a result of those disputes, Jones abandoned the  project
prior  to  completion  and  filed suit in the  matter  of  J.A.  Jones
Construction  Company v. Factor's Walk Partners in the  United  States
District  Court for the Northern District of Georgia.  On  January  1,
1994,  the court entered a judgment in favor of Jones and against  FWP
in  the  amount  of  $1,069,017 (including  pre-judgment  interest  of
$420,999).   The  judgment accrues interest at  9.5%  and  $46,171  of
interest  was accrued in the first nine months of 1996.  FWP filed  an
appeal  and  this appeal is currently held in abeyance while  FWP  and
Jones participate in a court sponsored settlement program.  Because of
the  complexity  of  the  factual and legal  issues  involved,  it  is
impossible  to  predict with any reasonable degree  of  certainty  the
outcome of the appeal.  A final outcome adverse to FWP is a reasonable
probability.   However, FWP continues to participate  in  negotiations
with  Jones,  which the Registrant believes will lead to a  settlement
that  will  allow  FWP  to retain ownership of the  property.   If  no
settlement occurs and an adverse appellate ruling is handed down,  the
property could be foreclosed.

                (b)   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
deficiency 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, 1997.

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             Number
Document

                  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, 1996.

<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 1, 1996          DIVERSIFIED HISTORIC INVESTORS II

                                   By: Dover Historic Advisors,
                                   General Partner
                                         
                                     By: DHP, Inc., Partner
                                                  
                                        By: /s/ Donna M. Zanghi
                                             DONNA M. ZANGHI,
                                             Secretary and Treasurer