AMENDED TO INCLUDE 1996 & 1997 RECALCULATION OF EPS ON THE
  ATTACHED FINANCIAL DATA SCHEDULE (EXHIBIT 27-1 AND 27-2)
                              
                              
                        United States
             Securities and Exchange Commission
                    Washington D.C. 20549
                              
                         FORM 10-K/A

[X]    Annual Report Pursuant to Section 13 or 15(d) of the
  Securities Exchange Act of 1934 (Fee Required) For the
  Fiscal Year Ended December 31, 1997

                             or

[ ]    Transition Report Pursuant to Section 13 or 15(d) of
  the Securities Exchange Act of 1934 (Fee Not Required)  For
  the Transition Period From _________ to __________.

               Commission File Number: 0-28402

                     ARADIGM CORPORATION

California                                   94-3133088
(State or other jurisdiction of           (I.R.S. Employer
 incorporation or organization)           Identification No.)

        26219 Eden Landing Road, Hayward,  CA  94545
           (Address of principal executive offices)

     Registrant's telephone number, including area code:
                       (510) 783-0100

Securities registered pursuant to Section 12(b) of the Act:
None

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value

   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.  [   ]
   

    As  of  January 30, 1998, there were 10,632,133 shares  of
common  stock  outstanding.   The aggregate  market  value  of
voting  stock  held  by non-affiliates of the  Registrant  was
approximately $47,846,983 based upon the closing price of  the
common  stock on January 30, 1998 on The Nasdaq Stock  Market.
Shares  of  common  stock held by each officer,  director  and
holder of five percent or more of the outstanding Common stock
have  been excluded in that such persons may be deemed  to  be
affiliates.   This determination of affiliate  status  is  not
necessarily a conclusive determination for other purposes.
                              
                              
                              
                           PART IV
                              

Item 14.EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS
ON FORM 8-K
  
(a)(1)Financial Statements.

  Included in Part II of this Report:      Page in Form 10-K

        Report of Ernst & Young LLP, Independent Auditors 36
        
        Balance Sheets --- December 31, 1997 and 1996     37
        
        Statements of Operations ---
        Years ended December 31, 1997, 1996, and 1995     38
        
        Statements of Shareholders' Equity ---
        Years ended December 31, 1997, 1996 and 1995      39
        
        Statements of Cash Flows ---
        Years ended December 31, 1997, 1996 and 1995      40
        
        Notes to Financial Statements                     41

  (2) Financial Statement Schedules.

      None.

  (3) Exhibits.

      3.1 (1) Amended and Restated Articles of Incorporation
               of the Company.
      3.2 (1) Bylaws of the Company
      4.1     Reference is made to Exhibits 3.1 and 3.2
      4.2 (1) Specimen stock certificate
      4.3 (1) Amended and Restated Investor Rights Agreement,
               dated December 22, 1995, among the Company and
               certain of its shareholders
      10.1 (1) (2) Form of Indemnity Agreement between the
               Registrant and each of its directors and
               officers
      10.2 (1) (2) The Company's Equity Incentive Plan, as
               amended (the "Equity Incentive Plan")
      10.3 (1) (2) Form of the Company's Incentive Stock
               Option Agreement under the Equity Incentive
               Plan
      10.4 (1) (2) Form of the Company's Nonstatutory Stock
               Option Agreement under the Equity Incentive
               Plan
      10.5 (1) (2) Form of the Company's Non-Employee
               Directors' Stock Option Plan
      10.6 (1) (2) Form of the Company's Nonstatutory Stock
               Option Agreement under the Non-Employee
               Directors' Stock Option Plan
      10.7 (1) (2) Form of the Company's Employee Stock
               Purchase Plan
      10.8 (1) (2) Form of the Company's Employee Stock
               Purchase Plan Offering Document
      10.9 (1)Lease Agreement for the property located at
               26219 Eden Landing Road, Hayward, California,
               dated November 1992 and amended November 29,
               1994, between the Company and Hayward Point
               Eden I Limited Partnership
      10.9a (5)    Second Amendment to Lease, dated December
               22, 1997, between the Company and Hayward Point
               Eden I Limited Partnership
      10.9b (5)    Third Amendment to Lease, dated January
               28, 1998, between the Company and Hayward Point
               Eden I Limited Partnership
      10.10 (5)    Lease Agreement for the property located
               at 26224 Executive Place, Hayward, California,
               dated January 28, 1998, between the Company and
               Hayward Point Eden I Limited Partnership
      10.11 (1)    Lease Agreement for the property located
               at 3930 Point Eden Way, Hayward, California,
               dated February 21, 1996, between the Company
               and Hayward Point Eden I Limited Partnership
      10.11a (5)   First Amendment to Lease, dated June 10,
               1996, between the Company and Hayward Point
               Eden I Limited Partnership
      10.11b (5)   Second Amendment to Lease, dated December
               22, 1997, between the Company and Hayward Point
               Eden I Limited Partnership
      10.11c (5)   Third Amendment to Lease, dated January
               28, 1998, between the Company and Hayward Point
               Eden I Limited Partnership
      10.12 (1) (2)Stock Purchase Agreement and related
               agreements, including Promissory Note, dated
               May 19, 1994, between the Company and Richard
               P. Thompson
      10.13 (1) (2)Stock Purchase Agreement and related
               agreements, including Promissory Note, dated
               May 23, 1995, between the Company and R. Ray
               Cummings
      10.14 (1) (2)Note Agreement and Promissory Note Secured
               by Deed of Trust, dated May 1, 1995, between
               the Company and R. Ray Cummings
      10.15 (1) (2)Promissory Note, dated October 26, 1995,
               between the Company and Igor Gonda
      10.16 (1) (2)Promissory Note, dated December 27, 1995,
               between the Company and Igor Gonda
      10.17 (1)    Master Lease Agreement and Warrant,
               between the Company and Comdisco, Inc., dated
               June 9, 1995
      10.18 (3)(4) Product Development and Commercialization
               Agreement between the Company and SmithKline
               Beecham PLC
      10.19 (3)(4) Stock Purchase Agreement between the
               Company and SmithKline Beecham PLC
      10.20 (5)    Lease Agreement for the property located
               at 3911 Trust Way, Hayward, California, dated
               March 17, 1997, between the Company and Hayward
               Point Eden I Limited Partnership
      10.20a (5)   First Amendment to Lease, dated December
               22, 1997, between the Company and Hayward Point
               Eden I Limited Partnership
      10.20b (5)   Second Amendment to Lease, dated January
               28, 1998, between the Company and Hayward Point
               Eden I Limited Partnership
      10.21 (5)    Lease Agreement for the property located
               in Phase V of the Britannia Point Eden Business
               Park in Hayward, California, dated January 28,
               1998, between the Company and Britannia Point
               Eden, LLC
      23.1 (5)Consent of Ernst & Young L.L.P., Independent
               Auditors.  Reference is made to page 57.
      24.1 (5)Power of Attorney.  Reference is made to page
               54.
      27.1      Financial Data Schedule for the year ended December
               31, 1997.
      27.2      Restated Financial Data Schedule for the year ended
               December 31, 1996.

      ****************************
      (1)Incorporated by reference to the indicated exhibit
        in the Company's Registration Statement on Form S-1
        (No. 333-4236), as amended.
      (2)  Represents a management contract or compensatory plan or
        arrangement.
      (3)  Incorporated by reference to the Company's Form 8-K filed
        on November 11, 1997.
      (4)  Confidential treatment requested.
      (5)  Previously filed with the Form 10-K filed on March 24,
        1998.



                         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,  in  the  City   of
Hayward, State of California, on the 31st day of March, 1998.


                              ARADIGM CORPORATION

                              By/s/ Richard P. Thompson*
                              Richard P. Thompson
                              President and Chief Executive
                              Officer



   Pursuant to the requirements of the Securities and 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.

Signature/Title                            Date

/s/Richard P. Thompson*                    March 31, 1998
Richard P. Thompson
President, Chief Executive Officer
and Director (Principal Executive Officer)


/s/Mark A. Olbert                          March 31, 1998
Mark A. Olbert
Vice President, Finance and Administration
and Chief Financial Officer(Principal
Financial and Accounting Officer)


/s/Reid M. Rubsamen, M.D.*                 March 31, 1998
Reid M. Rubsamen, M.D
Vice President, Medical Affairs, Secretary
and Director


/s/Jared A. Anderson, Ph.D.*               March 31, 1998
Jared A. Anderson, Ph.D.
Director


/s/Ross A. Jaffe, M.D.*                    March 31, 1998
Ross A. Jaffe, M.D.
Director


/s/Burton J. McMurtry, Ph.D.*              March 31, 1998
Burton J. McMurtry, Ph.D.
Director


/s/Gordon W. Russell*                      March 31, 1998
Gordon W. Russell
Director


/s/Fred E. Silverstein, M.D.*              March 31, 1998
Fred E. Silverstein, M.D.
Director


/s/Virgil D. Thompson*                     March 31, 1998
Virgil D. Thompson
Director


* By: /s/ Mark A. Olbert
      Mark A. Olbert
      As Attorney-in-Fact