SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C.  20549
                                        
                                    FORM 10-Q
                                        
                   QUARTERLY REPORT UNDER SECTION 13 or 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
 For Quarter ended September 30, 1996 Commission File Number  2-63880
 
 
                           ACE HARDWARE CORPORATION
          (Exact name of registrant as specified in its charter)
 
 
              DELAWARE                                       36-0700810
     (State or other jurisdiction of                     (I.R.S. Employer
     incorporation or organization)                     Identification No.)
 
 
    2200 Kensington Court, Oak Brook, IL                 60521
   (Address of principal executive offices)            (Zip code)
 
 
 Registrant's telephone number, including area code    (630) 990-6600
 
 
                                  NONE
                     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  XX  NO
 
 Indicate the number of shares outstanding of each of the issuer's classes of
 common stock, as of the close of the period covered by this report.
 
 
                  Class                   Outstanding at September 30, 1996
 Class A Voting Stock - $1,000 par value              3,934  shares
 Class B Stock        - $1,000 par value              2,924  shares
 Class C Stock        - $  100 par value          1,989,710  shares
 
 
 
 
 
 
 
 
                            ACE HARDWARE CORPORATION
                                        
                                      INDEX
 
 
 Part I. - Financial Information:                                  Page No.
 
 Balance Sheets -  September 30, 1996 and December 31, 1995            1
 
 Statements of Earnings - Nine Months and Three Months
     Ended September 30, 1996 and 1995                                 2
 
 
 Statements of Cash Flows - Nine Months Ended
     September 30, 1996 and 1995                                       3
 
 
 Notes to Financial Statements                                         4
 
 
 Management's Discussion and Analysis of Financial
     Condition and Results of Operations                              5 & 6
 
 Part II. - Other Information                                          7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 







<TABLE>
                        PART I.  FINANCIAL INFORMATION
                           ACE HARDWARE CORPORATION
                                BALANCE SHEETS

<CAPTION>
                                              September 30,       December 31,
                                                  1996                1995
                                             (000's omitted)

<S>                                        <C>                 <C>
                    ASSETS

Current Assets:
     Cash                                  $          3,620    $        12,853
     Accounts Receivable, Net                       318,914            287,078
     Merchandise Inventory                          333,353            254,451
     Prepaid Expenses and Other
        Current Assets                               13,244              9,324

     Total Current Assets                           669,131            563,706

     Property and Equipment, Net                    204,591            191,504
     Other Assets                                     3,878              3,923

     Total Assets                          $        877,600    $       759,133


  LIABILITIES AND MEMBER DEALERS' EQUITY

Current Liabilities:
     Current Installment of
        Long-Term Debt                     $          6,849    $         7,378
     Short-Term Borrowings                           53,500             13,000
     Accounts Payable                               384,731            338,577
     Patronage Dividends Payable
        in Cash                                      19,438             23,522
     Patronage Refund
        Certificates Payable                         14,295             12,641
     Accrued Expenses                                43,446             32,177

     Total Current Liabilities                      522,259            427,295

     Notes Payable                                   73,311             57,795
     Other Long-Term Liabilities                      3,985              2,057
     Patronage Refund
        Certificates Payable                         46,060             54,741

     Total Liabilities                              645,615            541,888

Member Dealers' Equity:
     Class A Stock of $1,000  Par Value               4,117              3,905
     Class B Stock of $1,000  Par Value               6,499              6,499
     Class C Stock of $100  Par Value               206,295            177,817
     Class C Stock of $100  Par Value,
        Issuable to Dealers for
        Patronage Dividends                          22,329             27,506
     Additional Stock Subscribed,
        Net of Unpaid Portion                           506                515
     Retained Earnings and
        Contributed Capital                           6,896              7,945

     Total Member Dealers' Equity                   246,642            224,187
     Less: Treasury Stock, at Cost                   14,657              6,942

     Total Member Dealers' Equity                   231,985            217,245

     Total Liabilities and
        Member Dealers' Equity             $        877,600    $       759,133

</TABLE>

                See accompanying notes to financial statements.
                                       
                                      -1-
                                       
                                       
                                       
<TABLE>
                                       
                           ACE HARDWARE CORPORATION
                            STATEMENTS OF EARNINGS


<CAPTION>
                           Three Months Ended       Nine Months Ended
                          Sept 30,    Sept 30,     Sept 30,    Sept 30,
                            1996        1995         1996        1995
                             (000's omitted)          (000's omitted)

<S>                   <C>         <C>         <C>          <C>
Net Sales             $   712,597 $   604,570 $  2,020,220 $ 1,808,039
Cost of Sales             656,176     558,027    1,867,429   1,666,036
 Gross Profit              56,421      46,543      152,791     142,003

Operating Expenses:
 Warehouse and
    Distribution            9,545       6,995       27,049      22,972
 Selling, General and
    Administrative         16,670      15,621       49,148      46,902
 Retail Success and
    Development             5,966       4,777       17,893      14,902

 Total Operating
    Expenses               32,181      27,393       94,090      84,776

 Operating Income          24,240      19,150       58,701      57,227

 Interest Expense          (3,235)     (2,981)      (8,100)    (10,180)
 Other Income, Net          1,226       1,193        3,532       3,290
 Income Taxes                (392)       (600)      (1,186)     (1,103)
Net Earnings          $    21,839 $    16,762 $     52,947 $    49,234

Distribution of
 Net Earnings:

 Patronage Dividends  $    21,666 $    17,220 $     53,996 $    50,002
 Retained Earnings            173        (458)      (1,049)       (768)
Net Earnings          $    21,839 $    16,762 $     52,947 $    49,234

</TABLE>

                See accompanying notes to financial statements.

                                     - 2 -




<TABLE>
                           ACE HARDWARE CORPORATION
                           STATEMENTS OF CASH FLOWS

<CAPTION>
                                                     NINE MONTHS ENDED
                                                        SEPTEMBER 30
                                                        (000's omitted)

                                                      1996          1995

<S>                                              <C>           <C>
Operating Activities:
    Net Earnings                                 $     52,947  $     49,234

  Adjustments to reconcile net earnings
  to net cash provided by operating
  activities:
    Depreciation                                       13,060        12,612
    Gain on sale of property and equipment                (22)          (10)
    Increase in accounts receivable, net              (31,836)       (4,294)
    Increase in merchandise inventory                 (78,902)       (6,424)
    Increase in prepaids and
      other current assets                             (3,920)         (935)
    Increase in accounts payable and
      accrued expenses                                 57,423        16,635
    Increase in other long-term liabilities             1,928           689
  Net Cash Provided By Operating Activities            10,678        67,507

Investing Activities:
    Purchases of property and equipment               (26,178)      (23,603)
    Proceeds from sale of
      property and equipment                               53            22
    Decrease (Increase) in other assets                    45        (4,189)
  Net Cash Used In Investing Activities               (26,080)      (27,770)

Financing Activities:
    Proceeds (Payments) from
      short-term borrowings                            40,500          (500)
    Proceeds (Payments) on long-term debt              14,987        (4,805)
    Payments on refund certificates and
      patronage financing programs                    (19,257)       (7,477)
    Proceeds from sale of common stock                  1,176         1,204
    Repurchase of common stock                         (7,715)       (7,257)
    Payments of cash portion of
      patronage dividend                              (23,522)      (27,302)
  Net Cash Provided by (Used in)
    Financing Activities                                6,169       (46,137)

  Decrease in Cash and Cash Equivalents                (9,233)       (6,400)

  Cash and Cash Equivalents at
    Beginning of Period                                12,853         6,501

  Cash and Cash Equivalents at End of Period     $      3,620  $        101

</TABLE>

                See accompanying notes to financial statements.


                                      -3-

                                       
                                       
                           ACE HARDWARE CORPORATION
                                       
                         NOTES TO FINANCIAL STATEMENTS
     
     
     1)   General
     
          The  accompanying  financial statements have not  been  examined  by
          independent  public  accountants except for the  December  31,  1995
          balance  sheet  but  in  the  opinion of  the  Company  reflect  all
          adjustments necessary to present fairly the financial position as of
          September 30, 1996 and 1995 and the results of operations  and  cash
          flows for the nine months then ended.  These interim figures are not
          necessarily  indicative of the results to be expected for  the  full
          year.
     
     2)   Patronage Dividends
     
          The  Company  operates as a cooperative organization  and  will  pay
          patronage  dividends  to  consenting member  dealers  based  on  the
          earnings derived from business done with such dealers.  It has  been
          the   practice  of  the  Company  to  distribute  substantially  all
          patronage sourced earnings in the form of patronage dividends.
     
          Net  earnings and patronage dividends will normally be similar since
          patronage sourced net earnings is paid to consenting member dealers.
          International  dealers signed under a Retail Merchant Agreement  are
          not  eligible for patronage dividends and related earnings  or  loss
          are not included in patronage sourced earnings.
     
     3)   Reclassifications
     
          Certain  financial  statement reclassifications have  been  made  to
          prior  year  and  prior  quarter amounts to  conform  to  comparable
          classifications followed in 1996.
     
     
     4)     Notes Payable
     
          In  August  1996,  the  Company  entered  into  a  $20,000,000  loan
          agreement  due June 15, 2011.  The note bears interest at 7.49%  per
          annum,  payable quarterly. Quarterly principle payments commence  on
          September 15, 2004 and continue through 2011.
          
          
          
          
          
          
          
          
          
          
                                      -4-
                                       
                           ACE HARDWARE CORPORATION
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Three Months Ended September 30, 1996 compared to Three Months Ended September
30, 1995.

Results of Operations

Net  sales increased 17.9% in 1996 primarily due to increased existing  dealer
volume,  increased  advertising  promotions, targeted  efforts  on  new  store
development  and conversions to the Ace program and the June 1996 start-up  of
Canadian operations.

Gross profit increased 21.2% vs. 1995, and increased as a percent of sales due
to  increased cash and vendor discounts, improved manufacturing gross  profits
and  gross  profit from the Canadian operation.  Increased levels of warehouse
costs  absorbed  into inventory and reduced levels of dealer  price  increases
partially offset the current quarter increases.

Warehouse and distribution expenses increased $2.5 million and as a percent of
sales  vs. 1995.  1996 start-up costs for the opening of one domestic and  two
Canadian  facilities  and wages to support the sales  increase  are  partially
offset  by increased levels of warehouse costs absorbed into inventory.  Lower
freight consolidation income also contributed to the 1996 expense increase.

Selling,  general and administrative expenses increased $1.0 million  or  6.7%
compared  to 1995, but decreased as a percent of sales.  Personnel  costs  for
the  start up facilities and increased data processing expenses are offset  by
reduced corporate administrative expenses due to re-engineering efforts.

Retail  success and development expenses increased $1.2 million or 24.9%,  and
increased  slightly as a percent of sales.  The increase is primarily  due  to
increased advertising and new business development costs.

Interest  expenses increased $254,000 or 8.5% vs. 1995 due to inventory  level
increases and additional dealer dating programs. Additional long-term debt was
issued in the third quarter to fund long-term capital investments.







                                      -5-

                           ACE HARDWARE CORPORATION
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Nine  Months Ended September 30, 1996 compared to Nine Months Ended  September
30, 1995.

Results of Operations

Net  sales  increased  11.7% in 1996 primarily due to  increased  volume  from
existing  dealers, increased advertising promotions, targeted efforts  on  new
store  development  and  conversions to  the  Ace  program  and  the  Canadian
operation start-up.

Gross profit increased 7.6% vs. 1995, but decreased as a percent of sales  due
to reduced levels of dealer price increases, a shift in sales mix resulting in
lower  handling  charges as a percent of sales, and increased warehouse  costs
absorbed  into inventory. This decrease is partially offset by  a  lower  LIFO
provision, improved manufacturing gross profit and Canadian operation results.

Warehouse and distribution expenses increased 17.8% and as a percent of  sales
vs.  1995.   1996  start-up  costs for the opening of  one  domestic  and  two
Canadian  facilities,  combined with increased  wages  to  support  the  sales
increase  and  lower  freight consolidation income  resulted  in  the  expense
increase.  Increased warehouse costs absorbed into inventory partially  offset
the year-to-date expense increase.

Selling,  general and administrative expenses increased by 4.8% vs. 1995,  but
decreased  as  a  percent  of  sales. The increase  is  primarily  related  to
increased  personnel  and  relocation costs for the  start-up  facilities  and
increased  data  processing  expenses.  This is offset  by  reduced  corporate
administrative expenses due to re-engineering efforts.

Retail  success and development expenses increased $3.0 million or  20.1%  vs.
1995 and as a percent of sales due to increased new business development costs
and decreased computer systems income.

Interest  expenses decreased 20.4% or $2.1 million vs. 1995 due  primarily  to
inventory turnover improvements in the first half of 1996.

Other income increased $242,000 vs. 1995 due primarily to the growth in dealer
financing programs.

Liquidity and Capital Resources

The  Company  expects  that internally generated funds,  along  with  new  and
established  lines  of credit and long-term financing,  will  be  the  primary
financing sources for capital expenditures in the future.


                                      -6-
                          PART II. OTHER INFORMATION
                                       
                           ACE HARDWARE CORPORATION



Item 6.   Exhibits and Reports on Form 8-K
          
          
     (b) There were no reports on Form 8-K filed for the three month
         period ended September 30, 1996.













                                      -7-
                                       
                                       
                                       
                                   SIGNATURE









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.









    ACE HARDWARE CORPORATION




       RITA D. KAHLE              DATE   November 14, 1996
       Rita D. Kahle
  Vice President, Finance

(Principal Financial and Accounting Officer,
 and duly authorized Officer of the registrant)