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

                  FORM 10-Q

(Mark One)

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

For the quarterly period ended     June 30,
1998                               

                     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          0-11210      
 


         Krupp Realty Fund, Ltd.-III


          Massachusetts                      
     04-2763323
(State or other jurisdiction of              
        (IRS employer
incorporation or organization)               
     identification no.)

470 Atlantic Avenue, Boston, Massachusetts   
               02210
(Address of principal executive offices)     
                       (Zip Code)


               (617) 423-2233
  (Registrant's telephone number, including
area code)


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      

The total number of pages in this document is
10.<PAGE>
       PART I.  FINANCIAL INFORMATION

Item 1.  CONSOLIDATED FINANCIAL STATEMENTS

This Form 10-Q contains forward-looking
statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. 
Actual results could differ materially from
those projected in the forward-looking
statements as a result of a number of factors,
including those identified herein.

          KRUPP REALTY FUND, LTD. - III AND SUBSIDIARY

                   CONSOLIDATED BALANCE SHEETS
                                      
<TABLE>
<CAPTION>
                             ASSETS

                                          Unaudited 
                                           June 30, December 31,
                                            1998        1997    

Multi-family apartment complexes,
  less accumulated depreciation of
  <S>                                     <C>        <C>
 $21,013,838 and $20,216,642, respectively$10,230,242$ 10,519,769
Cash and cash equivalents                    701,265     552,221
Replacement reserve escrow                   159,294     177,778
Cash restricted for tenant security deposits 205,437     202,691
Prepaid expenses and other assets            542,819     595,696
Deferred expenses, net of accumulated       
  amortization of $235,916 and $212,971,                 
  respectively                               283,668     306,613

     Total assets                        $12,122,725$ 12,354,768

                LIABILITIES AND PARTNERS' DEFICIT

Liabilities:                             
  Mortgage notes payable                 $18,930,995$ 19,126,371
  Accrued expenses and other
     liabilities (Note 3)                    592,706     683,413
  
     Total liabilities                    19,523,701  19,809,784

Partners' deficit (Note 2):                         
  Investor Limited Partners
   (25,000 Units outstanding)             (6,169,029)(6,220,367)
  Original Limited Partner                  (903,989)  (906,151)
  General Partners                          (327,958)  (328,498)

     Total Partners' deficit              (7,400,976)(7,455,016)

                                         Total liabilities and
  Partners' deficit                      $12,122,725$ 12,354,768
     
</TABLE>









The accompanying notes are an integral
part of the consolidated financial statements.<PAGE>
          KRUPP REALTY FUND, LTD. - III AND SUBSIDIARY

              CONSOLIDATED STATEMENTS OF OPERATIONS
                                     
(Unaudited)
                        
<TABLE>
<CAPTION>
                        For the Three Months  For the Six Months
                           Ended June 30,         Ended June 30,  

                          1998      1997        1998      1997   


Revenue:
 <S>                   <C>       <C>        <C>       <C>   
 Rental                $1,875,274$1,815,168 $3,746,410$3,583,363
 Other income              15,578    17,346  30,413      27,162
 
       Total revenue    1,890,852 1,832,514   3,776,8233,610,525
  
Expenses:
 Operating (Note 3)       495,483  502,931    1,013,600 1,014,049
 Maintenance              151,299  170,715      237,251   260,767
 Real estate taxes        137,738  126,325      277,185   261,166
 General and administrative                  
   (Note 3)                21,471   24,829      36,188     78,596
 Management fees (Note 3)  94,124   89,753     186,940    175,151
 Depreciation and
   amortization           409,113  490,834     820,141    963,037
 Interest                 415,160   426,671   838,450    855,339
 
       Total expenses   1,724,388 1,832,058  3,409,755  3,608,105
  

Net income             $  166,464$     456   $ 367,068 $   2,420
 
Allocation of net income
  (Note 2):

  Investor Limited Partners
     (25,000 Units
     outstanding)      $  158,141$   433     $  348,715$  2,299

  Investor Limited Partners
     Per Unit          $  6.33   $  .02      $  13.95  $    .09

  Original Limited
     Partner           $    6,659$   19      $   14,683 $    97

  General Partners     $    1,664$    4      $    3,670 $     24
 

</TABLE>













             The accompanying notes are an integral
      part of the consolidated financial statements.<PAGE>
          KRUPP REALTY FUND, LTD. - III AND SUBSIDIARY

              CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                         
(Unaudited)
    For the Six Months Ended
             June 30,       
       1998          1997   
Operating activities:
  <S>                                     <C>        <C>  
  Net income                              $  367,068 $    2,420 
  Adjustments to reconcile net income to net
     cash provided by operating activities:
       Depreciation and amortization         820,141    963,037
       Interest earned on replacement reserve              
          escrow                            (1,070)      (3,774)
       Changes in assets and liabilities: 
          Increase in cash restricted 
            for tenant security deposits    (2,746)     (14,370)
          Decrease in prepaid expenses and
            other assets                      52,877     99,082 
          Decrease in accrued expenses and           
            other liabilities               (91,415)    (89,644)
  
               Net cash provided by operating
                 activities                1,144,855    956,751
  
Investing activities:
  Additions to fixed assets                 (507,669)  (460,928)
  Deposits to replacement reserve escrow     (30,948)   (30,947)
  Withdrawals from replacement reserve escrow 50,502       -     

  Increase in accrued expenses and other 
     liabilities related to fixed asset additions 708         -  


          Net cash used in investing
          activities                        (487,407)  (491,875)
          
Financing activities:
  Distributions                            (313,028)   (208,685)
principal payments on mortgage notes payable(195,376)  (178,654)

               Net cash used in financing 
                 activities                 (508,404)  (387,339)
  
Net increase in cash and cash equivalents    149,044     77,537
     
Cash and cash equivalents, beginning of period552,221   468,735

Cash and cash equivalents, end of period  $  701,265 $  546,272

</TABLE>











             The accompanying notes are an integral
part of the consolidated financial statements.<PAGE>
          KRUPP REALTY FUND, LTD. - III AND SUBSIDIARY

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                     


(1)Accounting Policies

Certain information and footnote disclosures
normally included in financial statements
prepared in accordance with generally accepted
accounting principles have been condensed or
omitted in this report on Form 10-Q pursuant
to the Rules and Regulations of the Securities
and Exchange Commission.  In the opinion of
the General Partners of Krupp Realty Fund,
Ltd.-III and Subsidiary (the "Partnership"),
the disclosures contained in this report are
adequate to make the information presented not
misleading.  See Notes to Consolidated
Financial Statements included in the
Partnership's Annual Report on Form 10-K for
the year ended December 31, 1997 for
additional information relevant to significant
accounting policies followed by the
Partnership.

In the opinion of the General Partners of the
Partnership, the accompanying unaudited
consolidated financial statements reflect all
adjustments  necessary to present fairly the
Partnership's consolidated financial position
as of June 30, 1998, its results of operations
for the three and six months ended June 30,
1998 and 1997, and its cash flows for six
months ended June 30, 1998 and 1997.  Certain
prior period balances have been reclassified
to conform with current period consolidated
financial statement presentation.

The results of operations for the three and
six months ended June 30, 1998 are not
necessarily indicative of the results which
may be expected for the full year.  See
Management's Discussion and Analysis of
Financial Condition and Results of Operations
included in this report. 

(2)   Summary of Changes in Partners' Deficit
<TABLE>
<CAPTION>
   A summary of changes in Partners' deficit for the six months
ended June                              30, 1998 is as follows:

                        Investor  Original               Total
                        Limited   Limited     General   Partners'
                        Partners  Partner     Partners   Deficit  

 Balance at
 <S>             <C>         <C>       <C>       <C>
 December 31,1997$(6,220,367)$(906,151)$(328,498)$(7,455,016)

    Net income      348,715     14,683     3,670     367,068

    Distributions     (297,377)    (12,521)     (3,130)   (313,028)

    Balance at 
      June 30, 1998   $(6,169,029)$(903,989)$(327,958)$(7,400,976)

</TABLE>









Continued<PAGE>
KRUPP REALTY FUND, LTD. - III AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
                                     


(3)Related Party Transactions

The Partnership pays property management fees
to an affiliate of the General Partners for
management services.  Pursuant to the
management agreements, management fees are
payable monthly at a rate of 5% of the gross
receipts from the properties under management. 
The Partnership also reimburses affiliates of
the General Partners for certain expenses
incurred in connection with the operation of
the Partnership and its properties, including
administrative expenses.

   Amounts accrued or paid to the General Partners' affiliates
   were as follows:
<TABLE>
<CAPTION>
                       For the Three Months  For the Six Months
                          Ended June 30,        Ended June 30,  
                         1998             1997      1998    1997  

<S>                      <C>     <C>       <C>         <C>
Property management fees $94,124 $ 89,753  $186,940    $175,151
   
Expense reimbursements  41,523     42,745    61,467      93,823

Charged to operations$135,647 $132,498  $248,407  $268,974

</TABLE>
   Expense reimbursements due to affiliates of $3,258 is included
   in accrued
   expenses and other liabilities at June 30, 1997.        
  KRUPP REALTY FUND, LTD. - III AND SUBSIDIARY
                                     


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

This Management's Discussion and Analysis of
Financial Condition and Results of Operations
contains forward-looking statements including
those concerning Management's expectations
regarding the future financial performance and
future events.  These forward-looking
statements involve significant risk and
uncertainties, including those described
herein.  Actual results may differ materially
from those anticipated by such forward-looking
statements.

Liquidity and Capital Resources

The Partnership's ability to generate cash
adequate to meet its needs is dependent
primarily upon the operations of its real
estate investments.  Such ability is also
dependent upon the future availability of bank
borrowings and the potential refinancing and
sale of the Partnership's remaining real
estate investments.  These sources of
liquidity will be used by the Partnership for
payment of expenses related to real estate
operations, capital expenditures, debt service
and expenses.  Cash Flow, if any, as
calculated under Section 8.2(a) of the
Partnership Agreement, will then be available
for distribution to the Partners.

The Partnership has spent approximately
$508,000 to date and is expected to spend
approximately $1,037,000 for capital
improvements at its properties in 1998 to
remain competitive in their respective
markets.  These improvements include the
replacement of countertops, carpeting,
appliances, pavement upgrades and both
interior and exterior building improvements. 
The Partnership expects to fund these
improvements from established reserves and
cash generated from property operations.

Financial Accounting Standards Board Statement
No. 130 ("FAS 130") "Reporting Comprehensive
Income" is effective for fiscal years
beginning after December 31, 1997, although
earlier application is permitted.  FAS 130
establishes standards for reporting and
display of comprehensive income and its
components in financial statements.  Financial
Accounting Standards Board Statement No. 131
("FAS 131") "Disclosures about Segments of an
Enterprise and Related Information"
establishes standards for disclosing measures
for profit or loss and total assets for each
reportable segment.  FAS 131 is effective for
fiscal years beginning after December 15,
1997.   The Partnership does not believe that
the implementation of FAS 130 or FAS 131 will
have a material impact on the Partnership's
financial statements.

Operations

Net income increased for the three and six
months ended June 30, 1998, as compared to the
three and six months ended June 30, 1997, with
an increase in total revenue and a decrease in
total expenses.

Total revenue increased for the three and six
months ended June 30, 1998, as compared to the
three and six months ended June 30, 1997, due
to increases in average occupancy rates at all
of the Partnership's properties.  Occupancy
rates for the six months ended June 30, 1998
and 1997 at Brookeville, Hannibal Grove, and
Dorsey's Forge Apartments averaged 99%, 100%,
and 100%, and 98%, 99%, and 99%, respectively. 
In addition, rental rate increases were
implemented at all the Partnership's
properties during the six months ended June
30, 1998.





Continued
KRUPP REALTY FUND, LTD. - III AND SUBSIDIARY
          

Operations, Continued

Total expenses decreased for the three and six
months ended June 30, 1998, as compared to the
three and six months ended June 30, 1997, as a
result of lower maintenance, general and
administrative and depreciation expenses. 
Maintenance expense decreased due to
landscaping, snow removal expenditures and
interior building repairs completed at the
Partnership's properties during 1997.  General
and administrative expense decreased as a
result of 1997 legal costs relating to the
unsolicited tender offers to purchase
Partnership Units.  Depreciation expense
decreased as fixed asset additions purchased
in previous years became fully depreciated.


















































KRUPP REALTY FUND, LTD. - III AND SUBSIDIARY

         PART II - OTHER INFORMATION
                            



Item 1.               Legal Proceedings
                      Response:  None

Item 2.               Changes in Securities
                      Response:  None

Item 3.               Defaults upon Senior    
                      Securities
                      Response:  None

Item 4.               Submission of Matters   
                      to a Vote of Security   
                      Holders
                      response:  None

Item 5.               Other Information
                      Response:  None

Item 6.               Exhibits and Reports on 
                      Form 8-K
                      Response:  None


































                   <PAGE>
                  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.



     Krupp Realty Fund, Ltd. - III    
                                             
  (Registrant)



                                           
BY:/s/Wayne H. Zarozny               
Wayne H. Zarozny  
                                           
                      Treasurer and Chief
                      Accounting Officer of
                      The Krupp Corporation, 
                      a General Partner



DATE: August 11, 1998