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, 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
                                      

                             ASSETS
<TABLE>
<CAPTION>
                                         (Unaudited)
                                        September 30,December 31,
                                            1998        1997    

Multi-family apartment complexes,
  less accumulated depreciation of
  <S>                                      <C>         <C>
  $21,510,208 and $20,216,642, respectively$  9,965,151$10,519,769
Cash and cash equivalents                       586,146    552,221
Replacement reserve escrow                      140,712    177,778
Cash restricted for tenant security deposits    207,387    202,691
Prepaid expenses and other assets               617,924    595,696
Deferred expenses, net of accumulated      
  amortization of $247,388 and $212,971,                 
  respectively                               272,196    306,613

     Total assets                       $ 11,789,516$12,354,768

                LIABILITIES AND PARTNERS' DEFICIT

Liabilities:                            
  Mortgage notes payable                $ 18,829,979$19,126,371
  Accrued expenses and other liabilities
     (Note 3)                                607,644    683,413
  
     Total liabilities                    19,437,623 19,809,784

Partners' deficit (Note 2):                         
  Investor Limited Partners
   (25,000 Units outstanding)             (6,403,801) (6,220,367)
  Original Limited Partner                  (913,877)   (906,151)
  General Partners                          (330,429)   (328,498)

     Total Partners' deficit              (7,648,107) (7,455,016)

 Total liabilities and Partners' deficit$11,789,516   $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 Nine Months
                       Ended September 30,   Ended September 30, 

                          1998      1997        1998       1997  


Revenue:
 <S>                 <C>        <C>        <C>        <C>
 Rental              $1,878,976 $1,814,193 $5,625,386 $5,397,556
 Other income            19,141     12,893     49,554     40,055
 
     Total revenue      1,898,117 1,827,086  5,674,940  5,437,611
  
Expenses:
 Operating (Note 3)       479,416  522,059   1,493,016 1,536,108
 Maintenance              178,257  146,519     415,508   407,286
 Real estate taxes        139,657  140,059     416,842   401,225
 General and administrative                  
   (Note 3)                16,649   25,072      52,837   103,668
 Management fees (Note 3)  94,529   91,176     281,469   266,327
 Depreciation and                            
   amortization           507,842  504,023    1,327,9831,467,060
 Interest                 415,868   424,600   1,254,318 1,279,939
 
     Total expenses     1,832,218 1,853,508   5,241,973 5,461,613
  

Net income (loss)      $   65,899$ (26,422)  $ 432,967 $ (24,002)
 
Allocation of net income 
 (loss) (Note 2):

 Investor Limited Partners
     (25,000 Units
     outstanding)      $   62,603$ (25,101)  $411,318  $ (22,802)

  Investor Limited Partners
     Per Unit          $     2.50$  (1.00)   $ 16.45   $  (.91)

  Original Limited
     Partner           $    2,636$ (1,057)   $17,319   $ (960)

  General Partners     $   660   $  (264)    $4,330    $ (240)

</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
                                         
(Unaudited)
<TABLE>
<CAPTION>
                                   For the Nine Months Ended
                                             September 30,     
                                             1998        1997   
Operating activities:
  <S>                                     <C>        <C>
  Net income (loss)                       $ 432,967  $(24,002)
  Adjustments to reconcile net income (loss) to
     net cash provided by operating activities:
       Depreciation and amortization       1,327,983   1,467,060
       Interest earned on replacement reserve              
          escrow                              (2,624)    (3,774)
       Changes in assets and liabilities: 
          Increase in cash restricted 
            for tenant security deposits      (4,696)   (21,376)
          Decrease (increase) in prepaid expenses 
            and other assets                 (22,228)    59,827
          Decrease in accrued expenses and           
            other liabilities                (75,769)   (41,854)
  
               Net cash provided by operating
                 activities                1,655,633   1,435,881
  
Investing activities:
  Additions to fixed assets                 (738,948)(749,520)
  Deposits to replacement reserve escrow     (46,421)(46,421)
  Withdrawals from replacement reserve escrow 86,111    -      
  Decrease in accrued expenses and other 
     liabilities related to fixed asset additions -    (5,083)

               Net cash used in investing
                 activities                 (699,258)  (801,024)
          
Financing activities:
Distributions                              (626,058)  (417,370)
Principal payments on mortgage notes payable(296,392) (271,023)

               Net cash used in financing 
                 activities                (922,450)   (688,393)
  
Net increase (decrease) in cash and cash
  equivalents                                33,925    (53,536)
     
Cash and cash equivalents, beginning of period 552,221    468,735

Cash and cash equivalents, end of period  $  586,146 $   415,199

</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 September 30, 1998, its results of
operations for the three and nine months ended
September 30, 1998 and 1997, and its cash
flows for nine months ended September 30, 1998
and 1997. 

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

A summary of changes in Partners' deficit for
the nine months ended September 30, 1998 is as
follows:
<TABLE>
<CAPTION>
                        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            411,318    17,319    4,330       432,967 
                                 

    Distributions        (594,752) (25,045)     (6,261)   (626,058)

    Balance at 
    September 30, 1998$(6,403,801)$(913,877)$(330,429)$(7,648,107)

</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 Nine Months
                     Ended September 30,  Ended September 30,  
                      1998      1997      1998           1997  

<S>                     <C>      <C>       <C>         <C>
Property management fees$ 94,529 $ 91,176  $281,469    $266,327
   
Expense reimbursements  41,522     42,655   102,989     136,478

Charged to operations$136,051 $133,831  $384,458       $402,805

</TABLE>
   Expense reimbursements due from affiliates of $25,847 are
   included in prepaid expenses and other assets at September 30,
   1998.<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
$739,000 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 General Partners do not believe
that the implementation of FAS 130 or FAS 131
will have a material impact on the
Partnership's financial statements.

The General Partners of the Partnership have
conducted an assessment of the Partnership's
core internal and external computer
information systems and have taken the further
necessary steps to understand the nature and
extent of the work required to make its
systems Year 2000 ready in those situations in
which it is required to do so.  The Year 2000
readiness issue concerns the inability of
computerized information systems to accurately
calculate, store or use a date after 1999. 
This could result in a system failure or
miscalculations causing disruptions of
operations.  The Year 2000 issue affects
virtually all companies and all organizations.

In this regard, the General Partners of the
Partnership, along with certain affiliates,
began a computer systems project in 1997 to
significantly upgrade its existing hardware
and software.  The General Partners completed
the testing and conversion of the financial
accounting operating systems in February 1998. 
As a result, the General Partners have
generated operating efficiencies and believe
their financial accounting operating systems
are Year 2000 ready.  The Partnership incurred
hardware costs as well as consulting and other
expenses related to the infrastructure and
facilities enhancements necessary to complete
the upgrade and prepare for the Year 2000. 
There are no other systems or software that
the Partnership is using at the present time.


Continued
KRUPP REALTY FUND, LTD. - III AND SUBSIDIARY
          

Liquidity and Capital Resources, Continued

The General Partners of the Partnership are in
the process of evaluating the potential
adverse impact that could result from the
failure of material third-party service
providers (including but not limited to its
banks and telecommunications providers) and
significant vendors to be Year 2000 ready.  No
estimate can be made at this time as to the
impact of the readiness of such third parties.

Operations

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

Total revenue increased for the three and nine
months ended September 30, 1998, as compared
to the three and nine months ended September
30, 1997, primarily due to rental rate
increases implemented at all of the
Partnership's properties during the nine
months ended September 30, 1998.

Total expenses decreased for the three months
ended September 30, 1998, as compared to the
three months ended September 30, 1997, as the
decrease in operating expense more than offset
the increase in maintenance expense.  The
decrease in operating expense is due to a
reduction in contingent insurance premiums at
the Partnership's properties, due to a
favorable claim history.  Maintenance expense
increased due to a rise in landscaping
expenditures at Brookeville Apartments.

Total expenses decreased for the nine months
ended September 30, 1998, as compared to the
nine months ended September 30, 1997, with
decreases in operating, general and
administrative and depreciation expenses. 
Operating expense decreased due to a reduction
in insurance expense, as discussed above. 
General and administrative expenses 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)



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



DATE: November 10, 1998