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    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          0-11210      
 


         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
9.
<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

                                        September 30,December 31,
                                            1997        1996    

<S>                                       <C>         <C>
Multi-family apartment complexes,
less accumulated depreciation of
$19,714,282 and $18,281,640, respectively$10,822,108 $11,505,230
Cash and cash equivalents                    415,199    468,735
Replacement reserve escrow                   161,189     110,994 
Cash restricted for tenant security deposits 205,134     183,758
Prepaid expenses and other assets (Note 3)   543,263     603,090
Deferred expenses, net of accumulated 
  amortization of $201,499 and $167,081,
  respectively                               318,085    352,503

     Total assets                        $12,464,978$13,224,310

                LIABILITIES AND PARTNERS' DEFICIT

Liabilities:
  Mortgage notes payable                 $19,220,830 19,491,853
  Accrued expenses and other liabilities    699,941     746,878               8

     Total liabilities                    19,920,771 20,238,731

Partners' deficit (Note 2):
  Investor Limited Partners
   (25,000 Units outstanding)             (6,221,106) (5,801,804)
  Original Limited Partner                  (906,181)   (888,525)
  General Partners                          (328,506)   (324,092)

     Total Partners' deficit              (7,455,793) (7,014,421)


  Total liabilities and
  Partners' deficit                      $12,464,978 $13,224,310 
</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
                                     
<TABLE>
<CAPTION>

                                 For the Three Months     For the Nine Months
                                  Ended September 30,      Ended September 30, 

                                 1997         1996        1997        1996   
   <S>                      <C>          <C>         <C>         <C>
Revenue:
   Rental                   $1,814,193   $1,642,708  $5,397,556  $4,895,567
   Other income                 12,893       15,061      40,055      46,805
 
     Total revenue           1,827,086    1,657,769   5,437,611   4,942,372

Expenses:
   Operating (Note 3)          522,059      516,207   1,536,108   1,468,038
   Maintenance                 146,519      163,400     407,286     378,602
   Real estate taxes           140,059      136,452     401,225     383,335
   General and administrative 
     (Note 3)                   25,072       21,236     103,668      59,259
   Management fees (Note 3)     91,176       82,819     266,327     243,711
Depreciation and amortization  504,023      477,649   1,467,060   1,370,456
   Interest                    424,600      432,583   1,279,939   1,303,361

     Total expenses          1,853,508    1,830,346   5,461,613   5,206,762

   Net loss                 $  (26,422)  $ (172,577) $  (24,002)$ (264,390)

Allocation of net loss (Note 2):

   Investor Limited Partners
     (25,000 Units outstanding)$  (25,101)$ (163,949)$  (22,802) $ (251,171)

   Per Unit of Investor Limited 
     Partner Interest       $    (1.00)  $    (6.56) $     (.91) $   (10.05)

   Original Limited Partner $   (1,057)  $   (6,902) $     (960)$  (10,575)

   General Partners         $     (264)  $   (1,726) $     (240)$   (2,644)

</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>
                                         

                            For the Nine Months Ended             
                                    September 30,       
                                 1997            1996   
  <S>                                     <C>         <C>
Operating activities:
  Net loss                                $   (24,002)$  (264,390)
  Adjustments to reconcile net loss to net cash       
     provided by operating activities:
       Depreciation and amortization        1,467,060   1,370,456
       Interest earned on replacement reserve
          escrow                               (3,774)       -
       Changes in assets and liabilities:
          Decrease (increase) in cash restricted 
            for tenant security deposits      (21,376)     30,835

          Decrease in prepaid expenses and               
            other assets                       59,827      47,188 
          Decrease in accrued expenses and 
            other liabilities                 (41,854)    (43,831)


            Net cash provided by operating
               activities                   1,435,881   1,140,258

Investing activities:
  Additions to fixed assets                  (749,520)   (692,205)
  Deposits to replacement reserve escrow      (46,421)    (46,422)
  Withdrawals from replacement reserve escrow                -  
       40,272
  Increase (decrease) in accounts payable 
     related to fixed asset additions          (5,083)      2,744

            Net cash used in investing
               activities                    (801,024)   (695,611)

Financing activities:
Distributions                                (417,370)   (417,371)
Principal payments on mortgage notes payable (271,023) (247,834)

            Net cash used in financing
               activities                    (688,393)   (665,205)

Net decrease in cash and cash equivalents     (53,536)   (220,558)

Cash and cash equivalents, beginning of the period 468,735     654,696

Cash and cash equivalents, end of the period     $ 415,199 $   434,138


</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, (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, 1996
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 financial position as of
September 30, 1997, its results of operations
for the three and nine months ended September
30, 1997 and 1996 and its cash flows for the
nine months ended September 30, 1997 and 1996. 
Certain prior year balances have been
reclassified to conform with the current year
consolidated financial statement presentation.

 The results of operations for the three and nine months ended
 September 30, 1997 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

   A summary of changes in Partners' Deficit for the nine months
   ended September 30, 1997 is as follows:
<TABLE>
<CAPTION>

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

   <S>               <C>         <C>       <C>         <C>
   Balance at
   December 31, 1996 $(5,801,804)$(888,525)$(324,092)  $(7,014,421)

   Net loss              (22,802)     (960)     (240)      (24,002)

   Distributions          (396,500)  (16,696)   (4,174)  (417,370)


   Balance at 
   September 30,1997  $(6,221,106)$(906,181)$(328,506)$(7,455,793)

</TABLE>
                                                                  
    








Continued

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. 
These management agreements were sold to BRI
OP Limited Partnership, a subsidiary of
Berkshire Realty Company Inc., a publicly
traded real estate investment trust and an
affiliate of the General Partners, on February
28, 1997.  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 Nine Months
                          Ended September 30,   Ended September 30,
                           1997         1996      1997       1996 


<S>                     <C>          <C>      <C>         <C>
Property management fees$ 91,176     $ 82,819 $266,327    $243,711
   
Expense reimbursements    42,655       48,456   136,478   145,936

Charged to operations   $133,831     $131,275   $402,805 $389,647

</TABLE>
        
    Expense reimbursements due from affiliates of $5,949 and $0 are
    included in prepaid expenses and other assets at September 30,
    1997 and December 31, 1996, respectively.
<PAGE>
          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
$750,000 to date and is expected to spend
approximately $1,083,000 for capital
improvements at its properties in 1997.  In
order to fund the improvements, the
Partnership will use its existing cash
reserves, reserves for replacement and cash
flow from operations.  The Partnership
believes that the improvements are necessary
to compete in the current market.  Renovations
include the replacement of countertops,
carpeting, appliances, asphalt repairs, and
both interior and exterior building
improvements. 

Operations

Net loss decreased for the three and nine
months ended September 30, 1997, as compared
to the three and nine months ended September
30, 1996, as the increase in revenue more than
offset the increase in expenses.

Rental revenue increased for the three and
nine months ended September 30, 1997, as
compared to the three and nine months ended
September 30, 1996, as a result of increased
rental rates and average occupancy rates at
all three of the Partnership's properties. 
Occupancy rates at Brookeville Apartments
("Brookeville") averaged 98% and 95% for the
nine months ended September 30, 1997 and
September 30, 1996, respectively.  At Hannibal
Grove ("Hannibal"), occupancy rates averaged
99% and 94% for the nine months ended
September 30, 1997 and September 30, 1996,
respectively.  Occupancy rates at Dorsey's
Forge Apartments ("Dorsey's") averaged 99% and
95% for the nine months ended September 30,
1997 and September 30, 1996, respectively.

During the three and nine months ended
September 30, 1997 as compared to the three 
and nine months ended September 30, 1996, total
expenses increased, primarily due to
operating, general and administrative and 
depreciation expenses. Operating expenses 
increased due to increased salary and payroll 
expense along with increases in advertising 
and leasing expenses,which have contributed 
to the higher occupancy rates discussed above.  
General and administrative expense increased as
a result of legal costs related to the unsolicited
tender offers made to purchased Partnership Units.
Depreciation expense increased in conjunction with
capital improvement expenditures.  Maintenance 
expense increased during the nine months ended 
September 30, 1997 as compared to the nine months 
ended September 30, 1996, due to increases in 
landscaping, parking lot repairs,and interior 
building repairs at the Partnership's properties.  

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: November 12, 1997