UNITED STATES 

               SECURITIES AND EXCHANGE COMMISSION

                      Washington, DC 20549

                            FORM 10-K

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

          For the fiscal year ended December 31, 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          1-7211                       

                     Ionics, Incorporated                    
     (Exact name of registrant as specified in its charter)

            Massachusetts                    04-2068530      
   State or other jurisdiction of      (I.R.S. Employer 
   incorporation or organization        Identification Number)

 65 Grove Street, Watertown, Massachusetts         02472     
(Address of principal executive offices)        (Zip Code)

Registrant's telephone number, including area code: 617-926-2500

Securities registered pursuant to Section 12(b) of the Act:

   Title of each class      Name of each exchange on which registered

Common Stock, $1 par value            New York Stock Exchange        

       Securities registered pursuant to Section 12(g) of the Act:

                                  None                           
                            (Title of Class)

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   

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K.      [X]
/1



State the aggregate market value of the voting and non-voting common
equity held by non-affiliates of the registrant.  The aggregate market
value shall be computed by reference to the price at which the common
equity was sold, or the average bid and asked prices of such common
equity, as of a specified date within 60 days prior to the date of
filing.  The aggregate market value of the Common Stock of the registrant
held by non-affiliates as of March 19, 1999 was $440,651,315 (15,772,754
shares at $27 15/16 per share) (includes shares owned by a trust for the
indirect benefit of a non-employee director, and by a trust for the
indirect benefit of a spouse of a non-employee director).


               (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

     Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest practicable date.
As of March 19, 1999, 16,129,804 shares of Common Stock, $1 par value,
were issued and outstanding.

                   DOCUMENTS INCORPORATED BY REFERENCE

Portions of the 1998 Annual Report to Stockholders. Parts I, II
                                                    (for Item 201      
                                                    information)
                                                    and IV

Portions of the Definitive Proxy Statement for 
the Annual Meeting of Stockholders to be held 
on May 6, 1999.                                     Part III


























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                             PART I

     Statements in this Annual Report on Form 10-K which are not
historical facts, so-called "forward looking statements," are made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995.  Readers are cautioned that all
forward-looking statements involve risks and uncertainties,
including those detailed in the Company's filings with the
Securities and Exchange Commission.

Item 1.  BUSINESS

     Ionics, Incorporated ("Ionics," or the "Company") is a
leading water purification company engaged worldwide in the supply
of water and of water treatment equipment through the use of
proprietary separations technologies and systems.  Ionics'
products and services are used by the Company or its customers to
desalt brackish water and seawater, to purify and supply bottled
water, to treat water in the home, to manufacture and supply water
treatment chemicals and ultrapure water, to process food products,
recycle and reclaim process water and wastewater, and to measure
levels of water-borne contaminants and pollutants.  The Company's
customers include industrial companies, consumers, municipalities
and other governmental entities, and utilities.  Unless the
context indicates otherwise, the terms "Ionics" and "Company" as
used herein includes Ionics, Incorporated and all its
subsidiaries.

     The Company's business activities are now reported in four
business group segments.  This segmentation reflects a change from
three reportable segments which the Company provided in prior
periods.  The current reporting reflects the business group
structure which the Company put into place in the latter part of
1998.  The business group structure is based upon defined areas of
management responsibility with respect to markets, applications
and products.  These business group segments are:  the Equipment
Business Group; Ultrapure Water Group; Consumer Water Group; and
Instrument Business Group.  In 1998, these segments accounted for
approximately 37%, 32%, 23% and 8%, respectively, of the Company's
total revenues.  Approximately 47% of the Company's 1998 revenues
were derived from foreign sales or operations.

     Fifty years ago, the Company pioneered the development of the
ion-exchange membrane and the electrodialysis process.  Since that
time, the Company has expanded its separations technology base to
include a number of membrane and non-membrane-based separations
processes which the Company refers to as "The Ionics ToolboxR."
These separations processes include electrodialysis reversal
(EDR), reverse osmosis (RO), ultrafiltration (UF), microfiltration
(MF), electrodeionization (EDI), electrolysis, ion exchange,
carbon adsorption, and thermal processes such as evaporation and
crystallization, as well as solvent extraction and recovery
processes.  The Company believes that it is the world's leading
manufacturer of ion-exchange membranes and of membrane-based
systems for the desalination of water.  

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     The Company was incorporated in Massachusetts in 1948.  The
Company's principal executive offices are located at 65 Grove
Street, Watertown, Massachusetts 02472.

Financial Information About Business Segments

     The information contained in Note 15 of Notes to Consolidated
Financial Statements contained in the Company's Annual Report to
Stockholders for the year ended December 31, 1998 is incorporated
herein by reference.

Equipment Business Group

     The Equipment Business Group accounted for approximately 37%
of revenues in 1998.  This segment provides technologies,
treatment systems and services for seawater desalination, brackish
water desalination, wastewater reuse and recycle, potable water
and high purity water.  In addition this segment includes the
Company's custom fabrication activities and food and chemical
processing activities.

     Desalination and Related Water Treatment Equipment

     Opportunities for the sale of desalination and related
water treatment equipment arise from changes in the needs of
people and municipalities, from industrial shifts and growth,
and from environmental concerns.  With less than 1% of the
total water on the planet fresh and usable, desalination has
played an important role in creating new water sources.

     The Company sells a wide spectrum of products and systems to
serve this market which utilize technologies including EDR, ion
exchange, EDI, RO, UF, ozonation and carbon adsorption.
Depending on the customers' needs, the Company provides
standardized versions of systems utilizing one or more of the
technologies mentioned, or can supply complete turnkey plants
that may include standardized models as well as peripheral water
treatment equipment, complete engineering services, process and
equipment design, project engineering, commissioning, operator
training and field service.

     In 1997, the Company introduced the new Ionics EDR 2020TM
system, a third-generation brackish water desalination system
incorporating several new, patented improvements at reduced cost.  









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                               I-2



     Wastewater Treatment Equipment

     The market for wastewater treatment, recycle and reuse has
shown significant growth as world demand for water of specified
quality continues to increase and as regulations limiting waste
discharges to the environment continue to mount.  The wastewater
market is increasingly driven by the concept of total water
management, which involves the recognition that the water streams
which enter, leave or become part of a process can be managed to
achieve overall economic efficiencies.  Ionics services the
wastewater market with brine concentrators and crystallizers,
traditional wastewater treatment equipment, and special
electrodialysis reversal membrane-based concentrators for recycle
and reuse.

     The Company designs, engineers and constructs brine
concentrators, evaporators and crystallizers which are used to
clean, recover and recycle wastewater, particularly in zero
liquid discharge industrial uses.  Such systems may also
incorporate electrodialysis reversal membrane systems as
preconcentrators.  Ionics also holds a license for a patented
solvent extraction technology which separates contaminated
sludges, sediments and soils into oil, water and solids.  This
technology has potential use for cleanup of toxic organic
materials at contaminated sites.

     Ionics also designs, engineers and constructs customized
systems for industrial wastewater customers which may include
conventional treatment systems as well as advanced separation
technologies such as electrodialysis reversal, reverse osmosis,
electrolysis and microfiltration.  Typical industrial customers
are power stations, chemical and petrochemical plants, 
metal-working and automobile factories, textile manufacturers and
a variety of other industrial applications.  The Company also
provides custom and packaged sewage treatment systems for
municipalities.

     Drinking Water Supply  

     Ionics' position as a seller of purified or treated water
has evolved from its traditional role as a supplier of water
treatment equipment.  In certain situations, opportunities are
available for the Company to provide a complete service package
involving financing, construction, operation and maintenance of
water treatment facilities.

     Ionics, through its wholly owned subsidiary, Ionics Iberica,
S.A., owns and operates a 5.5 million gallon per day capacity
brackish water EDR facility and a 3.6 million gallon per day RO
seawater facility on Grand Canary Island, Spain.  Under long-term
contracts, the Company is selling the desalted water from both
facilities to the local water utility for distribution.



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                               I-3



     The Company's wholly owned subsidiary, Ionics (Bermuda)
Ltd., owns and operates a 600,000 gallon per day EDR brackish
water desalting plant on the island of Bermuda.  This plant
supplies fresh water under a long-term contract with Watlington
Waterworks Ltd., a Bermuda corporation partially owned by Ionics.

     Through its Ionics Aqua Design subsidiaries, the Company
owns and operates more than 30 desalination plants on a number of
Caribbean islands, which provide drinking water to hotels,
resorts and governmental entities.  Drinking water on these
islands is usually supplied pursuant to water supply contracts
with terms ranging from five to ten years.  In 1998, the Company
signed long-term, build-own-operate municipal desalination
contracts with the governments of Bonaire, Anguilla and Barbados.
The Barbados facility will be the largest brackish water
desalination facility in the Caribbean, and the Company will
supply water under a 15-year contract.

     Chemical Supply

     The Company uses its CloromatR electrolytic membrane-based
technology to produce sodium hypochlorite and related chlor-
alkali chemicals for industrial, commercial and other non-
consumer applications.  The Company's wholly owned Australian
subsidiary, Elite Chemicals Pty. Ltd. (Elite), utilizes Cloromat
systems to produce sodium hypochlorite on-site in Brisbane for
the industrial, commercial and janitorial supply of bleach
products, and to supply sodium hypochlorite to treat the City of
Brisbane's drinking water supply under a five-year contract.
Elite has recently expanded its distribution of bleach products
to the Sydney area. 

     Food Processing

     Under an agreement with a major U.S. dairy cooperative, the
Company oversees whey processing activities at two plants owned
by the cooperative, and receives a processing fee based on the
production of demineralized whey for its services.  Included in
the equipment being utilized by the Company at these plants are
its ElectromatR electrodialysis systems.  

     Custom Fabricated Products

     At its Bridgeville, Pennsylvania facility, the Company
fabricates specially designed products for industrial and
defense-related applications.  The Company's experience and
expertise in design, welding, machining and assembly to meet
exceptionally fine tolerances have been utilized to fabricate






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                               I-4



products ranging from intricate small parts to large multi-ton
assemblies.

Ultrapure Water Group

     The Ultrapure Water Group accounted for approximately 32% of
the Company's 1998 revenues.  This segment provides equipment and
services for specialized industrial users of ultrapure water.
Ultrapure water is water that has been purified by a series of
processes to the degree that remaining impurities are measured in
parts per billion or trillion.

     Ultrapure Water Equipment

     The demand for technologically advanced ultrapure water
equipment and systems has increased as the industries which use
ultrapure water have become more knowledgeable about their
quality requirements.  Ultrapure water needs are particularly
important in the semiconductor, pharmaceutical, petroleum and
power generation industries.  The semiconductor industry in
particular has increasingly demanded higher purity water as the
circuits on silicon wafers have become more densely packed.

     The Company supplies sophisticated ultrapure water systems
which utilize a combination of ion-exchange, EDI, RO and UF
technologies.  These systems are either trailer-mounted or land-
based and vary from standardized modules to large multimillion
dollar systems, depending on the customer's requirements.  In
1998, the Company was awarded an order for an ultrapure water
system utilizing the Company's EDI technology to be located in
Beijing, the first such installation in China.

     Included in the equipment sold by the Ultrapure Water Group
is the Company's OzgenR ozone-generation equipment, which is
being utilized by semiconductor plants as well as for swimming
pool and aquarium disinfection.

     The Company established the Ionics Life Sciences division at
the beginning of 1999 to expand its delivery of ultrapure water
equipment and services to the pharmaceutical industry.

     Ultrapure Water Supply

     In industries such as power generation, semiconductors,
pharmaceuticals and biotechnology, ultrapure water is critical to
product quality and yield.  Depending on the composition and
quantity of the impurities to be removed or treated, any one of
several membrane separations methods can be utilized to provide
ultrapure water to the customer.  Ionics has pioneered in the
application of three membrane technologies (EDR, RO and UF)
combined together in a mobile system called the "triple membrane"
trailer for use in the commercial processing of ultrapure water.
Ionics provides ultrapure water services and the production and
sale of ultrapure water from trailer-mounted units at customer
sites.
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                               I-5



     Ionics has also commercially implemented its EDI technology
in the production of ultrapure water.  EDI is a continuous,
electrically driven, membrane-based water purification process
which produces ultrapure water without the use of strong chemical
regenerants, such as sulfuric acid and caustic soda, which are
commonly required.  The Company's TMT-II trailers utilize a
combination of EDI, RO and UF technologies and represent what the
Company believes to be the most advanced technology used in the
commercial processing of ultrapure water.

     At the end of 1998, Company-owned or operated equipment for
the production of ultrapure water and other purified process
water under contract with companies in various industries had a
total capacity of approximately 24,000 gallons per minute.

     In January 1996, the Company acquired Apollo Ultrapure Water
Systems, Inc., based near Los Angeles, enabling the Company to
provide additional resources to service the growing Southern
California ultrapure water market.  In November 1997, the Company
acquired a majority interest in a Malaysian company now called
Ionics Enersave Engineering Sdn Bhd, which provides ultrapure
water services and systems to the southeast Asian market.

     One of the Company's important ultrapure water service
activities is ion-exchange regeneration services, which are
provided at four U.S. and four overseas locations.  In 1998, the
Company commissioned a state-of-the-art resin regeneration
facility in Singapore, and has just completed a 66,000 square
foot facility in San Jose, California which contains resin
regeneration, manufacturing and service facilities.  The Company
also provides system sanitization and high-flow deionization
services at customer sites.

Consumer Water Group

     This business group segment accounted for approximately 23%
of the Company's 1998 revenues.  The Company's consumer water
products serve the bottled water, home water purification, and
consumer bleach-based product market areas.

     Aqua CoolR Pure Bottled Water

     Ionics entered the bottled water business in 1984.  The
Company's strategy is to utilize its proprietary desalination and
purification technology to produce a brand of drinking water,
named Aqua Cool Pure Bottled Water, which can be reproduced with
uniform consistency and high quality at numerous locations around
the world.  Distribution operations have been established at
seven Company-owned locations throughout England; at 18 Company-
owned locations serving a number of metropolitan areas in the
eastern, southeastern and central United States; and, through
joint ventures, in Bahrain, Kuwait and Saudi Arabia.  The
Company's business focuses on the sale of Aqua Cool in five-
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                               I-6



gallon bottles to a variety of commercial and residential
customers.  The Company has recently expanded its product-line to
include office coffee service and other services complementary to
bottled water distribution.

     At the end of 1998, there were a total of 29 Aqua Cool
distribution centers in the United States and overseas, supplied
with Aqua Cool by nine regional water purification and bottling
facilities, supplying a customer base of approximately 135,000.
Early in 1999, the Company acquired Aquarelle, a French bottled
water distributor, with the intent of expanding the Company's
bottled water operations into continental Europe.

     Home Water Purification Systems

           Point-of-Use Devices

     The Company participates in the "point-of-use" market for
over- and under-the-sink water purifiers through the sale of
reverse osmosis and activated carbon-based filtering devices, and
through the manufacture and sale of HYgeneR, a proprietary, EPA-
registered, silver-impregnated activated carbon filtering medium.
The Company incorporates HYgene, which is designed to prevent
bacterial build-up while providing the capability of removing
undesirable tastes and odors from the water supply, into its own
bacteriostatic water conditioners and also sells HYgene to
manufacturers of household point-of-use water filters.

           Point-of-Entry Devices 

     Ionics' point-of-entry water products include ion-exchange
water conditioners to "soften" hard water, and chemicals and
media for filtration and treatment.  The Company sells its
products, under the General Ionics and other brand names, through
both independent distributorships and wholly owned sales and
service dealerships.

     In 1998, the Company introduced a new line of bacteriostatic
water conditioning systems, and began to market water
conditioning systems in Ireland.

     Bleach-Based Consumer Products

     The Company's Elite New England division operates a Cloromat
facility to produce and distribute bleach-based products for the
consumer market, primarily one-gallon bleach products under
private label or under the Company's own "EliteR", "Super
ValueTM" and "UltraPureTM" brands, and methanol-based automobile
windshield wash solution.  These operations are conducted in a
129,000 square foot manufacturing facility located in Ludlow,
Massachusetts.  




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                               I-7



Instrument Business Group

     The Company's Instrument Business Group accounted for
approximately 8% of the Company's 1998 revenues.  This business
segment comprises the Ionics Instrument Group located in
Watertown, Massachusetts and Ionics Sievers Instruments, located
in Boulder, Colorado.  The Company has become a leading
manufacturer of instruments that measure total organic carbon
across the water "spectrum" from ultrapure water to wastewater.
The Sievers Model 400 TOC analyzer is the only on-line TOC
analyzer designed specifically to comply with new United States
Pharmacopoeia (USP) requirements for determining water quality in
the pharmaceutical industry.  Ionics Sievers recently introduced
TOC analyzers sensitive to the parts-per-trillion range, used
primarily for ultrapure water measurement in the semiconductor
and pharmaceutical industries.

     Sievers TOC monitors complement the Company's TOC monitor
line for process water and wastewater applications.  The
Company's other instrument products, which are used both in the
laboratory and on-line, measure and detect, among other things,
total carbon, sulfur, nitric oxide, chemical oxygen demand and
total oxygen demand.  The Company also sells instruments for the
measurement of dissolved metals and specific chemical analyzers
for ammonia, phosphates, nitrates and chlorine.

     In 1998, the Company began to market a line of instruments
for the detection of thin layers of oil on water.  One line of
such instruments is designed and manufactured by Agar
Technologies Process and Environmental Control Ltd., an Israeli
corporation acquired by the Company early in 1999. 

Other Information Concerning the Business of the Company

     Raw Materials and Sources of Supply

     All raw materials essential to the business of the Company
can normally be obtained from more than one source.  In those few
instances where raw materials are being supplied by only one
source, the current supplier has given the Company a lead time
for cancellation, which the Company believes is sufficient to
enable it to obtain other suppliers.  In addition, the Company
maintains inventories of single source items which it believes
are adequate under the circumstances.

     The Company produces the membranes required for its
equipment and systems that use the ED, EDR, MF, UF and EDI
processes.  In 1997, the Company started to produce RO membranes.
Membranes used for the RO process are also purchased from outside
suppliers, and are normally available from multiple sources.


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                               I-8



     Patents and Trademarks

     The Company believes that its products, know-how, servicing
network and marketing skills are more significant to its business
than trademarks or patent protection of its technology.
Nevertheless, the Company has a policy of applying for patents
both in the United States and abroad on inventions made in the
course of its research and development work for which a
commercial use is considered likely.  The Company owns numerous
United States and foreign patents and trademarks and has issued
licenses thereunder, and currently has additional pending patent
applications.  Of the approximately 90 outstanding U.S. patents
held by the Company, a substantial portion involves membranes,
membrane technology and related separations processes such as ED
and EDR, RO, UF and EDI.  The Company does not believe that any
of its individual patents or groups of related patents, nor any
of its trademarks, is of sufficient importance that its
termination or abandonment, or the cancellation of licenses
extending rights thereunder, would have a material adverse effect
on the Company.

     Seasonality

     The activities of the Company's businesses are not of a
seasonal nature, other than certain activities of the Consumer
Products segment.  Bottled water sales and bleach products for
swimming pool use tend to increase during the summer months.
Also, sales levels for automobile windshield wash solution
increase in the winter months.

     Customers

     The nature of the Company's business is such that it
frequently has in progress large contracts with one or more
customers for specific projects; however, there is no one
customer whose purchases account for 10% or more of the Company's
consolidated revenues and whose loss would have a material
adverse effect on the Company and its subsidiaries taken as a
whole.

     Backlog

     The Company's backlog of firm orders was $189,917,000 at
December 31, 1998 and $153,679,000 at December 31, 1997.  For
multi-year contracts, the Company includes in reported backlog
the revenues associated with the first five years of the
contract.  For multi-year contracts which are not otherwise
included in backlog, the Company includes in backlog up to one
year of revenues.  The Company expects to fill approximately 77%
of its December 31, 1998 backlog during 1999.  The Company does
not believe that there are any seasonal aspects to its backlog
figures.
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                               I-9




     Government Contracts

     The Company does not believe that any of its sales under
U.S. Government contracts or subcontracts during 1998 are subject
to renegotiation.  The Company has not had adjustments to its
negotiated contract prices, nor are any proceedings pending for
such adjustments.

     Research and Development

     The Company is actively engaged in research and development
directed toward products for use in water purification,
processing and measurement, and separations technology.  The
Company's research and development expenses were approximately
$6,635,000 in 1998, $5,410,000 in 1997, and $5,108,000 in 1996.

     Competition

     The Company experiences competition from a variety of
sources with respect to virtually all of its products, systems
and services, although the Company knows of no single entity that
competes with it across the full range of its products and
services.  Competition in the markets served by the Company is
based on a number of factors, which may include price,
technology, applications experience, know-how, availability of
financing, reputation, product warranties, reliability, service
and distribution.

     With respect to the Company's Equipment Business Group,
there are a number of companies, including several sizable
chemical companies, that manufacture membranes, but not
equipment.  There are numerous smaller companies, primarily
fabricators, that build water treatment and desalination
equipment, but which generally do not have their own proprietary
membrane technology.  A limited number of companies manufacture
both membranes and equipment.  The Company has numerous
competitors in its conventional water treatment, instruments and
fabricated products business lines.

     In 1998, the International Desalination Association released
a report providing data regarding the manufacturers of
desalination equipment.  According to the report, which covered
land-based water desalination plants delivered or under
construction as of December 31, 1997, with a capacity to produce
100 cubic meters (approximately 25,000 gallons) or more of fresh
water daily, the Company ranked first in terms of the cumulative
number of such plants sold, having sold 1,742 plants of such
capacity, more than the next three manufacturers combined.  In
addition, the Company ranked first in the total capacity of such
plants sold.
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                              I-10



     With respect to the Ultrapure Water Group business segment,
the Company competes with suppliers of ultrapure water services
on a national and regional basis, and with other manufacturers of
membrane-related equipment.  

     With respect to the Company's Consumer Water Group business
segment, there are numerous bottled water companies which compete
with the Company, including several which are much larger than
the Company.  Most of the Company's competitors in point-of-entry
and point-of-use products for the home are small assemblers,
serving local or regional markets.  However, there are also
several large companies competing nationally in these markets.  

     In the case of its silver-impregnated activated carbon
product lines, the Company knows of two competitors with which it
competes on a national basis.

     The Company competes with many suppliers of bleach and
bleach-based cleaning products and automobile windshield wash for
the consumer market, a number of which are much larger than the
Company.

     The Company is unable to state with certainty its relative
market position in all aspects of its business.  Many of its
competitors have financial and other resources greater than those
of the Company.

     Environmental Matters

     Continued compliance by the Company and its subsidiaries
with federal, state and local provisions regulating the discharge
of materials into the environment or otherwise relating to the
protection of the environment is expected to have no material
effect upon capital expenditures, earnings or the competitive
position of the Company or any of its subsidiaries.

     In May 1998, a wholly owned California subsidiary of the
Company was notified by the U.S. Environmental Protection Agency
("EPA") that it was a potentially responsible party (PRP)in
connection with the Operating Industries, Inc.  Superfund Site in
Monterey Park, California.  Because of its relatively small
volumetric contribution of waste to the site,the subsidiary was
eligible to participate in a de minimis settlement, and in
January 1999 made full and timely payment of $13,685 in
settlement.

     The Company is one of approximately 1,000 PRPs at a
Superfund site at Solvent Recovery Services of New England in
Southington, Connecticut (the "SRS Site").  The Company's
volumetric ranking in comparison to the total volume of wastes
treated at the SRS Site is approximately 0.5%.  A non-time
critical removal action, consisting of containment, pumping, and 
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                              I-11



treatment of the most heavily contaminated non-bedrock ground
water, was completed in 1995.  The Company's share of combined
assessments to date against all PRPs for non-time critical
removal actions and other work totals approximately $60,000.  The
ultimate site cleanup cost is currently not expected to exceed
$59 million, of which the Company's share would not exceed
$308,000 including the amounts already assessed against the
Company.  While it is too soon to predict the scope and cost of
the final clean-up remedy that the EPA will select, based on the
Company's small volumetric ranking and the identities of the
larger PRPs, which include many substantial companies, the
Company believes that its liability in this matter will not have
a material effect on the Company or its financial position.

     During 1995, the Company acquired certain real property in
Maryland to accommodate expansion of the Elite bleach-based
consumer chemicals business.  Prior to its acquisition by the
Company, the property had been determined to have some
contamination of soil and ground water.  In conjunction with the
purchase, the Company worked closely with the Maryland Department
of the Environment and, based upon an environmental study
completed by a third party consultant, reached a preliminary
agreement regarding treatment.  Based upon the costs of treatment
identified by the consultant, the Company has provided a
conservative accrual, recorded as part of the cost of the
property.  The Company believes that additional liability
associated with treatment of the property, if any, will not have
a material effect on the Company or its financial condition.

     Certain former operations of a division of the Company are
the subject of an investigation into possible violations of
environmental regulations by the Office of the Attorney General
of the Commonwealth of Massachusetts.  See Item 3, Legal
Proceedings, page I-15.

     The Company has never had a product liability claim grounded
in environmental liability, and believes that the nature of its
products and business makes such a claim unlikely.

     Employees

     The Company and its consolidated subsidiaries employ
approximately 2,200 full-time persons.  None of the Company's
employees are represented by unions or have entered into
workplace agreements with the Company, except for the employees
of the Company's Australian subsidiary and certain employees of
the Company's Spanish subsidiary.  The Company considers its
relations with its employees to be good.

     Foreign Operations

     The Company's sales to customers in foreign countries
primarily involve desalination systems, ultrapure water systems, 
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                              I-12



water and wastewater treatment systems, sodium hypochlorite,
Cloromat systems, products and services related to these
foregoing systems, instruments and bottled water.  The Company
seeks to minimize financial risks relating to its international
operations.  Wherever possible, the Company obtains letters of
credit or similar payment assurances denominated in U.S. dollars.
If U.S. dollar payments cannot be secured, the Company, where
appropriate, enters into foreign currency hedging transactions.
The Company also uses foreign sources for equipment parts and may
borrow funds in local (foreign) currencies to offset the asset
risk of foreign currency devaluation.  Net foreign currency
transaction (losses)/gains included in income before income taxes
and minority interest totaled $(28,000) in 1998, $100,000 in
1997, and $548,000 in 1996.

     The Company engages in certain foreign operations both
directly and through the following wholly owned subsidiaries:
Ionics (Bermuda) Ltd.; Ionics Iberica, S.A.; Ionics (U.K.)
Limited; Ionics Italba, S.p.A.; Ionics Nederland B.V.; Elite
Chemicals Pty. Ltd.; Ionics France S.A.; Resources Conservation
Co. International; Ionics (Korea) Inc.; Aqua Design, Inc.,
including its subsidiaries and affiliates; Ionics Asia-Pacific
Pte Ltd.; Ionics Watertec Pty. Ltd.; Ionics Foreign Sales
Corporation Limited; Aquarelle S.A. (acquired in early 1999); and
Agar Technologies Process and Environmental Control Ltd.
(acquired in early 1999).  In 1997, the Company acquired a 55%
ownership interest in Ionics Enersave Engineering Sdn Bhd, a
Malaysian corporation with subsidiary operations in Indonesia and
China.

     The Company also engages in various foreign operations
through investments in affiliated companies and joint venture
relationships.  The activities include the production, sale and
distribution of bottled water through a 40% owned affiliate in
Bahrain, a 40% owned affiliate in Saudi Arabia, and a 49% owned
affiliate in Kuwait.

     In addition, the Company has a 20% ownership interest in
Watlington Waterworks, Limited in Bermuda.  Watlington collects,
treats and distributes water throughout Bermuda for both potable
and non-potable uses.  The Company also has a 50% ownership
interest in Yuasa-Ionics Co., Ltd., Tokyo, Japan, which among its
activities serves as a distributor of certain of the Company's
products in Japan; and, through Ionics Iberica, S.A., 20%
interests in Aguas Tratadas de Cadereyta, S.A. de C.V. and Aguas
Tratadas de Madero, S.A. de C.V., companies organized to provide
water treatment services in Mexico.  Through its Italian
subsidiary, the Company has a 50% ownership interest in Agrinord
S.r.l., an Italian company engaged in waste treatment operations.

     Further geographical and financial information concerning
the Company's foreign operations appears in Notes 1, 5, 8, 13, 14
and 15 to the Company's Consolidated Financial Statements
included as part of the Company's 1998 Annual Report to
Stockholders, which Notes are incorporated herein by reference.
/15

                              I-13



Financial Information About Geographic Areas

     The information contained in Note 15 of Notes to
Consolidated Financial Statements contained in the Company's
Annual Report to Stockholders for the year ended December 31,
1998 is incorporated herein by reference.


Item 2.  PROPERTIES

     The Company's executive offices are located in Watertown,
Massachusetts.  Manufacturing and other operations are carried
out in a number of locations.  The following table provides
certain information as to the Company's principal general offices
and manufacturing facilities:
<TABLE>
<CAPTION>
                                        Business                             Approximate
                                    Segment Utilizing          Property      Square Feet
     Location                         the Location             Interest     of Floor Space
<S>                                 <C>                          <C>        <C>
     Watertown, MA (headquarters)   Equipment Business Group     Owned          134,000
                                    Instrument Business Group    
                                    Consumer Water Group         

     Watertown, MA                  Equipment Business Group     Owned          127,000
                                    Consumer Water Group

     Bridgeville, PA                Equipment Business Group     Owned           77,000
                                    Consumer Water Group         

     Elkton, MD                     Consumer Water Group         Owned          234,000

     Ludlow, MA                     Consumer Water Group         Owned          129,000

     San Jose, CA                   Ultrapure Water Group        Owned           66,000

     Boulder, CO                    Instrument Business Group    Leased          74,000

     London, England                Consumer Water Group         Owned           36,000
</TABLE>
     The Company also owns or leases smaller facilities in which its
business segments conduct business.  The Company makes use primarily of
leased facilities for its Aqua Cool bottled water distribution centers.
The majority of these facilities contain less than 10,000 square feet.

     The Company considers the business facilities that it utilizes to be
adequate for the uses to which they are being put.







/16

                              I-14





Item 3.  LEGAL PROCEEDINGS

     The Company is involved in the normal course of its business in
various litigation matters.  Although the Company is unable to determine
at the present time whether it will have any liability in any of the
pending matters, some of which are in the early stages of pre-trial
discovery, the Company believes generally that it has meritorious defenses
and that none of the pending matters will have an outcome material to the
financial condition or business of the Company.

     The Attorney General of the Commonwealth of Massachusetts is
conducting an investigation into certain former operations of a division
of the Company during portions of the years 1991 through 1995.  The
Company is cooperating with this investigation of possible violations of
environmental statutes and regulations that relate to one facility that
ceased operations in 1995.  The Company cannot predict the outcome of this
matter, but it may result in administrative, civil or criminal charges
and/or monetary payments.

     On March 27, 1998, the Company was served with a summons and
complaint in connection with a lawsuit now captioned United States Filter
Corporation, U.S. Filter/Ionpure, Inc., IP Holding Company, Millipore
Corporation and Millipore Investment Holdings Limited v. Ionics,
Incorporated, filed in the U.S. District Court, District of Massachusetts
(Boston).  Plaintiffs allege that the Company is infringing a certain
reissue patent, which issued on March 10, 1998, by making, selling,
offering to sell and using the Company's electrodeionization (EDI) systems
within the United States.  The Company was recently notified that
plaintiffs are seeking to add to their complaint claims of infringement of
certain earlier-issued patents.  The Company, which pioneered the
development of the EDI process over 30 years ago and holds a number of
patents related to EDI technology, believes that it has valid defenses to
plaintiffs' infringement claims and intends vigorously to defend itself in
this litigation, which is in the early discovery stages.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this report.











/17

                              I-15



                                 PART II


Item 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND
         RELATED STOCKHOLDER MATTERS

     Reference is made to the Company's Annual Report to Stockholders for
the year ended December 31, 1998.  The information set forth on page 37
entitled "Common Stock Price Range" and on the inside back cover of such
Annual Report is hereby incorporated by reference.


Item 6.  SELECTED FINANCIAL DATA

    Reference is made to the Company's Annual Report to Stockholders
for the year ended December 31, 1998.  The information set forth on
page 37 of such Annual Report entitled "Statement of Operations
Data" and "Balance Sheet Data" is hereby incorporated by reference.


Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
         OF OPERATIONS AND FINANCIAL CONDITION

    Reference is made to the Company's Annual Report to Stockholders
for the year ended December 31, 1998.  The information set forth on
pages 17 through 21 of such Annual Report entitled "Management's
Discussion and Analysis of Results of Operations and Financial
Condition" is hereby incorporated by reference.


Item 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Derivative Instruments

The Company had $318,000 of foreign exchange contracts outstanding
at December 31, 1998.  These contracts are immaterial to the Company
and as they were used to hedge foreign currency denominated
transactions, any change in the fair value of the contracts would be
offset by changes in the underlying value of the transactions. The
Company has no other derivative financial instruments, or other
financial and commodity instruments for which fair value disclosure
would be required under SFAS No. 119.  The Company holds no
investment securities which would require disclosure of market risk.

Market Risk

The Company's primary market risk exposures are in the areas of
interest rate risk and foreign currency exchange rate risk.  The
Company's investment portfolio of cash equivalents is subject to
interest rate fluctuations, but the Company believes this risk is
immaterial due to the short-term nature of these investments.  At
December 31, 1998, the Company had $6.9 million of short-term debt
and $1.5 million of long-term debt outstanding.  The short-term debt
was issued under various working capital lines and due to its short-
/18

                                  II-1



term maturities, a hypothetical 10% decrease in the Company's
weighted average short-term borrowing rate at December 31, 1998
would not have materially affected the year-end carrying value of
the debt.  The Company's exposure to currency exchange rate
fluctuations has been and is expected to remain modest due to the
fact that the operations of its international subsidiaries are
primarily conducted in their respective local currencies.


Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    Reference is made to the Company's Annual Report to Stockholders
for the year ended December 31, 1998.  The consolidated balance
sheets of the Registrant as of December 31, 1998 and 1997, the
related consolidated statements of operations, cash flows and
stockholders' equity for the years ended December 31, 1998, 1997 and
1996, and the related notes with the opinion thereon of
PricewaterhouseCoopers LLP, independent accountants, on pages 21
through 36, and Selected Quarterly Financial Data (unaudited) on
page 37, are hereby incorporated by reference.


Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON 
        ACCOUNTING AND FINANCIAL DISCLOSURE

    This item is not applicable to the Company.





























/19

                                  II-2



                             PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    The information required by Item 10 with respect to directors is
hereby incorporated by reference from the Company's definitive proxy
statement for the Annual Meeting of Stockholders to be held May 6,
1999, filed with the Securities and Exchange Commission on March 24,
1999.

    The information regarding executive officers is as follows:

                      Age as of     Positions
Name                 March 1, 1999  Presently Held

Arthur L. Goldstein*      63        President, Chief Executive Officer
                                     and Director since 1971; Chairman
                                     of the Board since 1990
William E. Katz           74        Executive Vice President since 1983;
                                     Director since 1961
John P. Bergeron          47        Vice President since February 23, 1999;
                                     Treasurer since November 1997
Edward J. Cichon          44        Vice President, Equipment Business
                                     Group since July 1998
Robert J. Halliday        44        Vice President, Finance since
                                     December 1990; Chief Financial
                                     Officer since August 1992
Stephen Korn              53        Vice President, General Counsel
                                     and Clerk since September 1989
Theodore G. Papastavros   65        Vice President since 1975; 
                                     Vice President, Strategic Planning
                                     since February 1990
___________________
* Member of Executive Committee

     There are no family relationships between any of the
officers or directors.  Officers of the Company are appointed
each year at the annual meeting of Directors.

     Except for Mr. Cichon, all of the above executive officers
have been employed by the Company in various capacities for more
than five years.  Prior to joining the Company in July 1998, Mr.
Cichon served as a Senior Vice President of Metcalf & Eddy, Inc.,
a water and wastewater engineering and services firm, where he
was employed for 18 years.


Item 11.  EXECUTIVE COMPENSATION

     The information required by Item 11 is hereby incorporated
by reference from the Company's definitive proxy statement for
the Annual Meeting of Stockholders to be held May 6, 1999, filed
with the Securities and Exchange Commission on March 24, 1999.

/20

                               III-1




Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
          AND MANAGEMENT

     The information required by Item 12 is hereby incorporated
by reference from the Company's definitive proxy statement for
the Annual Meeting of Stockholders to be held May 6, 1999, filed
with the Securities and Exchange Commission on March 24, 1999.


Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information required by Item 13 is hereby incorporated
by reference from the Company's definitive proxy statement for
the Annual Meeting of Stockholders to be held May 6, 1999, filed
with the Securities and Exchange Commission on March 24, 1999.





































/21

                               III-2



                            PART IV

Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
          REPORTS ON FORM 8-K

(a)  1.   Financial Statements

          See Index to Financial Statements and Financial
          Statement Schedules on page IV-8.  The Financial
          Statement Schedules are filed as part of this Annual
          Report on Form 10-K.

     2.   Financial Statement Schedules

          See Index to Financial Statements and Financial
          Statement Schedules on page IV-8.

     3.   Exhibits
<TABLE>
<CAPTION>
     Exhibit                                                              
       No.    Description                                                 
     <S>      <C>                                                         <C>
     3.0      Articles of Organization and By-Laws

              3.1    Restated Articles of Organization filed                *
                     April 16, 1986 (filed as Exhibit 3.1 to the
                     Company's Annual Report on Form 10-K for the
                     year ended December 31, 1997).

              3.1(a) Amendment to the Restated Articles of                  *
                     Organization filed June 19, 1987 (filed 
                     as Exhibit 3.1(a) to the Company's Annual
                     Report on Form 10-K for the year ended 
                     December 31, 1997).

              3.1(b) Amendment to Restated Articles of                      *
                     Organization filed May 13, 1988 
                     (filed as Exhibit 3.1(b) to
                     Registration Statement No. 33-38290 on
                     Form S-2 effective January 24, 1991).

              3.1(c) Amendment to Restated Articles of                      *
                     Organization filed May 8, 1992
                     (filed as Exhibit 3.1 to the Company's
                     Quarterly Report on Form 10-Q for the 
                     quarterly period ending June 30, 1996).

              3.1(d) Amendment to Restated Articles of                      *
                     Organization filed May 8, 1998
                     (filed as Exhibit 3.1 to the Company's
                     Quarterly Report on Form 10-Q for the
                     quarterly period ending March 31, 1998).



/22


                             IV-1



              3.2    By-Laws, as amended through November 14, 1997          *
                     (filed as Exhibit 3.2 to the Company's Annual
                     Report on Form 10-K for the year ended 
                     December 31, 1997).

     4.0      Instruments defining the rights of security holders,
              including indentures

              4.1    Renewed Rights Agreement, dated as of                  *
                     August 19, 1997 between Registrant and 
                     BankBoston N.A. (filed as Exhibit 1 to 
                     the Company's Current Report on Form 8-K 
                     dated August 27, 1997).

              4.2    Form of Common Stock Certificate (filed as            *
                     Exhibit 4.2 to the Company's Annual Report
                     on Form 10-K for the year ended
                     December 31, 1997).

     10.0     Material Contracts

              10.1   1979 Stock Option Plan, as amended through            *
                     February 22, 1996 (filed as Exhibit 10.1 to
                     the Company's Annual Report on Form 10-K for the
                     year ended December 31, 1995).                       

              10.2   1986 Stock Option Plan for Non-Employee Directors,    * 
                     as amended through February 19, 1997 (filed as 
                     Exhibit 10.2 to the Company's Annual Report on
                     Form 10-K for the year ended December 31, 1996).

              10.3   Amended and Restated Credit Agreement between         *
                     the Company and the First National Bank of Boston
                     dated as of December 31, 1992 (filed as 
                     Exhibit 10.3 to the Company's Annual Report
                     for the year ended December 31, 1997).

              10.3(1)Amendment Agreement No. 1, dated as of                *
                     December 31, 1995, to Amended and Restated
                     Credit Agreement between the Company and The
                     First National Bank of Boston (filed as Exhibit
                     10.3(1) to the Company's Annual Report on Form 10-K
                     for the year ended December 31, 1995).

              10.3(2)Amendment Agreement No. 2, dated as of               
                     December 31, 1998, to Amended and Restated
                     Credit Agreement between the Company and
                     BankBoston N.A.

              10.4   Operating Agreement dated as of September 27,         *
                     1989 between the Company and Aqua Cool
                     Enterprises, Inc. (filed as Exhibit 10.4 to
                     the Company's Annual Report on Form 10-K for
                     the year ended December 31, 1997).

/23


                             IV-2




              10.5   Term Lease Master Agreement dated as of               *
                     September 27, 1989 between the Company and
                     Aqua Cool Enterprises, Inc. (filed as 
                     Exhibit 10.5 to the Company's Annual Report on
                     Form 10-K for the year ended December 31, 1997).

              10.6   Option Agreement dated as of September 27, 1989       *
                     among the Company, Aqua Cool Enterprises, Inc.
                     and the other parties named therein (filed as
                     Exhibit 10.6 to the Company's registration 
                     statement on Form S-2, No. 33-38290, 
                     effective January 24, 1991).

              10.7   1994 Restricted Stock Plan (filed as Exhibit 10.12    *
                     to the Company's Annual Report on Form 10-K dated
                     March 30, 1995).

              10.8   1997 Stock Incentive Plan (filed as Exhibit 10.12     *
                     to the Company's Annual Report on Form 10-K dated
                     December 31, 1996).

              10.9   Ionics, Incorporated Supplemental Executive           *
                     Retirement Plan effective as of January 1, 1996
                     (filed as Exhibit 10.9 to the Company's Annual
                     Report on Form 10-K dated December 31, 1997).

              10.10  Form of Employee Retention Agreement dated            *
                     February 24, 1998 between the Company and 
                     certain officers of the Company and its 
                     subsidiaries (filed as Exhibit 10.10 to the 
                     Company's Annual Report on Form 10-K dated 
                     December 31, 1997).

              10.11  1998 Non-Employee Directors Fee Plan (filed           *
                     as Exhibit 10.1 to the Company's Quarterly
                     Report on Form 10-Q for the quarterly period
                     ending September 30, 1998).

 
     13.0     Annual Report to Stockholders of the Company for the          
              year ended December 31, 1998 (constituting the following
              sections:  Management's Discussion and Analysis of Results of
              Operations and Financial Condition; Report of Independent
              Accountants; Consolidated Statements of Operations; 
              Consolidated Balance Sheets; Consolidated Statements of
              Cash Flow; Consolidated Statements of Stockholders' Equity;
              Notes to Consolidated Financial Statements; Selected 
              Financial Data; Board of Directors; Corporate Officers;
              Principal U.S. Offices, Affiliates & Subsidiaries;
              Corporate Headquarters; Principal Overseas Offices,
              Affiliates & Subsidiaries; Investor Information; Transfer
              Agent & Registrar; and Auditors). 



/24


                             IV-3




     21.0     Subsidiaries of the Registrant.                             

     23.0     Consents

              23.1   Consent of PricewaterhouseCoopers LLP
                     to incorporation by reference of that firm's 
                     report dated February 19, 1999, which is 
                     included on page 21 of the Registrant's 
                     Annual Report to Stockholders 
                     for the year ended December 31, 1998.

     24.0     Power of Attorney.                                          

     27.0     Financial Data Schedule.                                    **
________________________________
     *   incorporated herein by reference
     **  for electronic purposes only

</TABLE>




































/25



                             IV-4




(b)  Reports on Form 8-K

     No reports on Form 8-K were filed by the Registrant during
     the last quarter of fiscal 1998.

     Undertaking

     For purposes of complying with the amendments to the rules
     governing Form S-8 effective July 13, 1990 under the
     Securities Act of 1933, the undersigned hereby undertakes as
     follows, which undertaking shall be incorporated by
     reference into Registrant's registration statements on Form
     S-8 Nos. 33-14194, 33-5814, 33-2092, 2-72936, 2-82780, 2-
     64255, 33-41598, 33-54293, 33-59051, 333-05225, 333-29135,
     and 33-54400.

     Insofar as indemnification for liabilities arising under the
     Securities Act of 1933 may be permitted to directors,
     officers and controlling persons of the registrant pursuant
     to the foregoing provisions, or otherwise, the registrant
     has been advised that in the opinion of the Securities and
     Exchange Commission such indemnification is against public
     policy as expressed in the Act and is, therefore,
     unenforceable.  In the event that a claim for
     indemnification against such liabilities (other than the
     payment by the registrant of expenses incurred or paid by a
     director, officer or controlling person of the registrant in
     the successful defense of any action, suit or proceeding) is
     asserted by such director, officer or controlling person in
     connection with the securities being registered, the
     registrant will, unless in the opinion of its counsel the
     matter has been settled by controlling precedent, submit to
     a court of appropriate jurisdiction the question whether
     such indemnification by it is against public policy as
     expressed in the Act and will be governed by the final
     adjudication of such issue.



















/26


                             IV-5




                        SIGNATURES


     Pursuant to the requirements of Section 13 or 15(d) 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.

                             IONICS, INCORPORATED
                             (Registrant)



                             By:  /s/Arthur L. Goldstein  
                                  Arthur L. Goldstein,
                                  Chairman of the Board,
                                  President and Chief
                                  Executive Officer
          
                             Date:    March 29, 1999      



     Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by
the following persons on behalf of the registrant and in
the capacities and on the dates indicated.



Date: March 29, 1999         By: /s/Arthur L. Goldstein  
                                 Arthur L. Goldstein,
                                 Chairman of the Board,
                                 President and
                                 Chief Executive Officer
                                 (principal executive
                                 officer) and Director


Date: March 29, 1999         By: /s/Robert J. Halliday  
                                 Robert J. Halliday, 
                                 Vice President, Finance
                                 and Chief Financial Officer
                                 (principal financial officer
                                 and principal accounting
                                 officer)









/27


                             IV-6







Date: March 29, 1999         By/s/Douglas R. Brown             
                                  Douglas R. Brown, Director


Date: March 29, 1999         By/s/William L. Brown             
                                  William L. Brown, Director


Date: March 29, 1999         By/s/Arnaud de Vitry d'Avaucourt  
                                  Arnaud de Vitry d'Avaucourt,
                                  Director


Date: March 29, 1999         By/s/Kathleen F. Feldstein        
                                  Kathleen F. Feldstein,
                                  Director


Date: March 29, 1999         By/s/William E. Katz              
                                  William E. Katz, Director


Date: March 29, 1999         By/s/John J. Shields              
                                  John J. Shields, Director


Date: March 29, 1999         By/s/Carl S. Sloane               
                                  Carl S. Sloane, Director


Date: March 29, 1999         By/s/Daniel I.C. Wang             
                                  Daniel I.C. Wang, Director


Date: March 29, 1999         By/s/Mark S. Wrighton             
                                  Mark S. Wrighton, Director


Date: March 29, 1999         By/s/Allen S. Wyett               
                                  Allen S. Wyett, Director












/28


                             IV-7




                     IONICS, INCORPORATED
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

                                                         PAGES

Report of Independent Accountants                           21*

Financial Statements:

     Consolidated Statements of Operations for the
     Years Ended December 31, 1998, 1997 and 1996           22*

     Consolidated Balance Sheets as of
     December 31, 1998 and 1997                             23*

     Consolidated Statements of Cash Flows for the 
     Years Ended December 31, 1998, 1997 and 1996           24*

     Consolidated Statements of Stockholders' Equity for
     the Years Ended December 31, 1998, 1997 and 1996       25*

     Notes to Consolidated Financial Statements          26-36* 


Supporting Financial Statement Schedules for the years ended
December 31, 1998, 1997 and 1996:

     Schedule II - Valuation and Qualifying Accounts     IV-9
          

Report of Independent Accountants on Financial
Statement Schedule                                       IV-10

__________________

All other schedules are omitted because the amounts are
immaterial, the schedules are not applicable, or the required
information is shown in the financial statements or the notes
thereto.

*  Page references are to the Annual Report to Stockholders of
   the Company for the year ended December 31, 1998, which pages
   are incorporated herein by reference.












/29


                             IV-8



<TABLE>
                             IONICS, INCORPORATED

                SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                                                        

<CAPTION>
                                      Additions    Additions
                         Balance at   Charged to     Due to
                           End of     Costs and     Acquired                      Balance at
Description              Prior Year    Expenses    Businesses     Deductions(A)   End of Year
<S>                      <C>          <C>          <C>            <C>             <C>
Allowance for doubtful
accounts and uncollectible
notes receivable:

     Years ended:

     December 31, 1998   $2,289,000   $1,319,000   $       0      $  717,000      $2,891,000

     December 31, 1997   $2,858,000   $1,408,000   $  40,000      $2,017,000      $2,289,000

     December 31, 1996   $2,410,000   $1,011,000   $ 286,000      $  849,000      $2,858,000


(A)  Deductions result primarily from the write-off of accounts.



</TABLE>
























/30


                             IV-9




               REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
Ionics, Incorporated:

     Our report on the consolidated financial statements of
Ionics, Incorporated as of December 31, 1998 and 1997 and for
each of the three years in the period ended December 31, 1998
has been incorporated by reference in this Form 10-K from page
21 of the 1998 Annual Report to Stockholders of Ionics,
Incorporated.  In connection with our audits of such financial
statements, we have also audited the related financial statement
schedule for each of the three years in the period ending
December 31, 1998, listed in the Index on page IV-8 of this Form
10-K.

     In our opinion, the financial statement schedule referred
to above, when considered in relation to the basic financial
statements taken as a whole, present fairly, in all material
respects, the information required to be included therein.



                                /s/PRICEWATERHOUSECOOPERS LLP



Boston, Massachusetts
February 19, 1999


























/31


                             IV-10



<TABLE>
                                  EXHIBIT INDEX
<CAPTION>
                                                                     Sequentially
     Exhibit                                                           Numbered
       No.      Description                                              Page    
     <S>        <C>                                                  <C>

     3.0      Articles of Organization and By-Laws

              3.1     Restated Articles of Organization filed              *
                      April 16, 1986 (filed as Exhibit 3.1 to the
                      Company's Annual Report on Form 10-K for the
                      year ended December 31, 1997).

              3.1(a)  Amendment to the Restated Articles of                *
                      Organization filed June 19, 1987 (filed 
                      as Exhibit 3.1(a) to the Company's Annual
                      Report on Form 10-K for the year ended 
                      December 31, 1997).

              3.1(b)  Amendment to Restated Articles of                    *
                      Organization filed May 13, 1988 
                      (filed as Exhibit 3.1(b) to
                      Registration Statement No. 33-38290 on
                      Form S-2 effective January 24, 1991).

              3.1(c)  Amendment to Restated Articles of                    *
                      Organization filed May 8, 1992
                      (filed as Exhibit 3.1 to the Company's 
                      Quarterly Report on Form 10-Q for the quarterly 
                      period ending June 30, 1996).

              3.1(d)  Amendment to Restated Articles of                    *
                      Organization filed May 8, 1998
                      (filed as Exhibit 3.1 to the Company's
                      Quarterly Report on Form 10-Q for the
                      quarterly period ending March 31, 1998).

              3.2     By-Laws, as amended through November 14, 1997        *
                      (filed as Exhibit 3.2 to the Company's Annual
                      Report on Form 10-K for the year ended 
                      December 31, 1997).

     4.0      Instruments defining the rights of security holders,
              including indentures

              4.1     Renewed Rights Agreement, dated as of                *
                      August 19, 1997 between Registrant and 
                      BankBoston N.A. (filed as Exhibit 1 to 
                      the Company's Current Report on Form 8-K 
                      dated August 27, 1997).




/32






              4.2     Form of Common Stock Certificate (filed as           *
                      Exhibit 4.2 to the Company's Annual Report
                      on Form 10-K for the year ended
                      December 31, 1997).

     10.0     Material Contracts

              10.1    1979 Stock Option Plan, as amended through           *
                      February 22, 1996 (filed as Exhibit 10.1 to
                      the Company's Annual Report on Form 10-K for the
                      year ended December 31, 1995).                      

              10.2    1986 Stock Option Plan for Non-Employee Directors,   * 
                      as amended through February 19, 1997 (filed as 
                      Exhibit 10.2 to the Company's Annual Report on
                      Form 10-K for the year ended December 31, 1996).

              10.3    Amended and Restated Credit Agreement between        *
                      the Company and the First National Bank of Boston
                      dated as of December 31, 1992 (filed as 
                      Exhibit 10.3 to the Company's Annual Report
                      for the year ended December 31, 1997).

              10.3(1) Amendment Agreement No. 1, dated as of               *
                      December 31, 1995, to Amended and Restated
                      Credit Agreement between the Company and The
                      First National Bank of Boston (filed as Exhibit
                      10.3(1) to the Company's Annual Report on Form 10-K
                      for the year ended December 31, 1995).

              10.3(2) Amendment Agreement No. 2, dated as of               35
                      December 31, 1998, to Amended and Restated
                      Credit Agreement between the Company and
                      BankBoston N.A.

              10.4    Operating Agreement dated as of September 27,        *
                      1989 between the Company and Aqua Cool
                      Enterprises, Inc. (filed as Exhibit 10.4 to
                      the Company's Annual Report on Form 10-K for
                      the year ended December 31, 1997).

              10.5    Term Lease Master Agreement dated as of              *
                      September 27, 1989 between the Company and
                      Aqua Cool Enterprises, Inc. (filed as 
                      Exhibit 10.5 to the Company's Annual Report on
                      Form 10-K for the year ended December 31, 1997).

              10.6    Option Agreement dated as of September 27, 1989      *
                      among the Company, Aqua Cool Enterprises, Inc.
                      and the other parties named therein (filed as
                      Exhibit 10.6 to the Company's registration 
                      statement on Form S-2, No. 33-38290, 
                      effective January 24, 1991).


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              10.7    1994 Restricted Stock Plan (filed as Exhibit 10.12   *
                      to the Company's Annual Report on Form 10-K dated
                      March 30, 1995).

              10.8    1997 Stock Incentive Plan (filed as Exhibit 10.12    *
                      to the Company's Annual Report on Form 10-K dated
                      December 31, 1996).

              10.9    Ionics, Incorporated Supplemental Executive          *
                      Retirement Plan effective as of January 1, 1996
                      (filed as Exhibit 10.9 to the Company's Annual
                      Report on Form 10-K dated December 31, 1997).

              10.10   Form of Employee Retention Agreement dated           *
                      February 24, 1998 between the Company and 
                      certain officers of the Company and its 
                      subsidiaries (filed as Exhibit 10.10 to the 
                      Company's Annual Report on Form 10-K dated 
                      December 31, 1997).

              10.11   1998 Non-Employee Directors Fee Plan (filed          *
                      as Exhibit 10.1 to the Company's Quarterly
                      Report on Form 10-Q for the quarterly period
                      ending September 30, 1998).
 
     13.0     Annual Report to Stockholders of the Company for the        40 
              year ended December 31, 1998 (constituting the following
              sections:  Management's Discussion and Analysis of Results
              of Operations and Financial Condition; Report of Independent
              Accountants; Consolidated Statements of Operations; 
              Consolidated Balance Sheets; Consolidated Statements of
              Cash Flow; Consolidated Statements of Stockholders' Equity;
              Notes to Consolidated Financial Statements; Selected 
              Financial Data; Board of Directors; Corporate Officers;
              Principal U.S. Offices, Affiliates & Subsidiaries;
              Corporate Headquarters; Principal Overseas Offices,
              Affiliates & Subsidiaries; Investor Information; Transfer
              Agent & Registrar, and Auditors). 

     21.0     Subsidiaries of the Registrant.                             75

     23.0     Consents

              23.1   Consent of PricewaterhouseCoopers LLP                76
                     to incorporation by reference of that firm's 
                     report dated February 19, 1999, which is 
                     included on page 21 of the Registrant's 
                     Annual Report to Stockholders 
                     for the year ended December 31, 1998.

     24.0     Power of Attorney.                                          77

     27.0     Financial Data Schedule.                                    **
________________________________
     *   incorporated herein by reference
     **  for electronic purposes only
</TABLE>

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