<PAGE>
                             
                             
                       UNITED STATES
            SECURITIES AND EXCHANGE COMMISSION
                  Washington, D.C. 20549
                             
                      FORM 10-Q/A1
                             
   [X] Quarterly Report Pursuant to Section 13 or 15(d) of the
       Securities Exchange Act of 1934 for the Quarterly Period
       Ended September 30, 1996
                             
                            or
                             
    [  ] Transition Report Pursuant to Section 13 or 15(d) of
         the Securities Exchange Act of 1934
                                 
                                 
                                 
                                 
                  Commission File Number 0-25812
                                 
                                 
                                 
                           PSINET INC.
      (Exact name of Registrant as specified in its charter)
                                 
                                 
                                 
                                 
             New York                       16-1353600
  (State or other jurisdiction of         (I.R.S. Employer
   incorporation or organization)        Identification No.)

 510 Huntmar Park Drive, Herndon, VA            20170
(Address of principal executive office)       (Zip Code)

                          (703) 904-4100
      (Registrant's telephone number, including area code)  
                                 

                          Not Applicable
     (Former name, former address and former fiscal year, 
               if changed since last report date)
                                 
                                 
                                 
                                 
                                 
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 


     Common Stock, $.01 par value -- 40,069,726 shares
                    as of November 1, 1996
    (Indicate the number of shares outstanding of each of the
       issuers classes of common stock, as of the latest
                        practicable date)
                                 
             The Index of Exhibits appears on page 5.
                                 
                                 


<PAGE>


PART II. OTHER INFORMATION


Item 5.   Other Information

     On September 19, 1996, the Company entered into a Joint
Venture Agreement (the "Joint Venture Agreement") with
Chatterjee Management Company (doing business as The
Chatterjee Group) ("Chatterjee") pursuant to which the Company
and an investment group led by Chatterjee would establish a
joint venture for the purpose of building an Internet
network across Europe and providing Internet-related
services in Europe and such investment group would invest up
to $41 million in the joint venture. No monies were invested
by Chatterjee or the investment group pursuant to the Joint
Venture Agreement nor were any other actions undertaken to
implement it.  For several months, the Company and
Chatterjee discussed a substantive change to the structure
discussed in the Joint Venture Agreement which, if entered
into, would have resulted in a direct investment in the
Company by Chatterjee. By letter dated July 14, 1997,
Chatterjee made certain statements concerning the
negotiations between Chatterjee and the Company, including,
(i) Chatterjee's conclusion that PSINet does not intend to
proceed with the Joint Venture Agreement or the substantive
change to the structure discussed in the Joint Venture
Agreement (which Chatterjee claimed had been agreed upon by
PSINet) and (ii) Chatterjee's intent to proceed based upon
that conclusion.  In the event the Company and Chatterjee do
not complete this transaction (and the Company presently
believes it is likely that the parties will not reach such
an agreement), the Joint Venture Agreement may be abandoned
or the parties may engage in arbitration under the Joint
Venture Agreement and related documents.  It is also
possible that Chatterjee may institute other legal
proceedings seeking to enforce the Joint Venture Agreement
or otherwise.  In any such event, the Company would
vigorously defend such action.


Item 6.   Exhibits And Reports On Form 8-K

(a)       Exhibits

          The following Exhibits are filed herewith:

          
          Exhibit 2      Joint Venture Agreement dated as of
                         September 19, 1996            
                         between the Company and Chatterjee 
                         Management Company *
     
          Exhibit 10.1   Registration Rights Agreement made 
                         as of September 19, 1996 by 
                         and between the Company and The 
                         Chatterjee Management Company 

          Exhibit 10.2   Employment Agreement dated October 
                         1, 1996 between the Company and 
                         Edward D. Postal



                                2


<PAGE>
 
          Exhibit 10.3   Employment Agreement dated October 
                         9, 1996 between the Company and 
                         Richard R. Frizalone

          Exhibit 10.4   Master Software/Equipment Lease 
                         Agreement dated as of         
                         September 20, 1996 between the 
                         Company and LPI Software      
                         Funding Group, Inc.

          Exhibit 10.5   Amendment No. 1 to Asset Purchase 
                         Agreement and Network Services 
                         Agreement entered into as of June 
                         28, 1996 by and between the Company
                         and MindSpring Enterprises, Inc.

          Exhibit 10.6   Amended and Restated Convertible 
                         Note of MindSpring Enterprises, 
                         Inc. in the principal amount of 
                         $2,000,000 due June 28, 1997

          Exhibit 10.7   Convertible Note of MindSpring 
                         Enterprises, Inc. in the principal 
                         amount of $9,929,000 due September 
                         1, 1997

          Exhibit 10.8   Amendment No. 2 to Asset Purchase 
                         Agreement entered into as of  
                         September 1, 1996 by and between 
                         the Company and MindSpring    
                         Enterprises, Inc.

          Exhibit 11.1   Calculation of Loss per Share and 
                         Weighted Average Shares Used in 
                         Calculation for the Three Months 
                         Ended September 30, 1996

          Exhibit 11.2   Calculation of Loss per Share and 
                         Weighted Average Shares Used in 
                         Calculation for the Nine Months 
                         Ended September 30, 1996

          Exhibit 27     Financial Data Schedule **

          Exhibit 99.1   Risk Factors


                    *    This Exhibit has been filed in 
                         redacted form pursuant to a request
                         for confidential treatment filed 
                         separately with the Commission 
                         pursuant to Rule 24b-2.

                    **   Not deemed filed for purposes of
                         Section 11 of the Securities Act of
                         1933, Section 18 of the Securities 
                         Exchange Act of 1934 and Section 
                         323 of the Trust Indenture Act of 
                         1939 or otherwise subject to the 
                         liabilities of such sections and 
                         not deemed part of any registration
                         statement to which such exhibit 
                         relates.

(b)  Reports on Form 8-K

On October 30, 1996, the Company filed a Current Report on
Form 8-K with the Securities and Exchange Commission dated
September 19, 1996 stating, among other things, that it had
entered into an agreement with Chatterjee Management Company
(doing business as The Chatterjee Group), a Delaware
corporation ("Chatterjee"), pursuant to which the Company
and an investment group led by Chatterjee would establish a
joint venture to be known as PSINet Europe for the purpose
of building an Internet network across Europe and providing
Internet-related services in Europe.  
                                3
<PAGE>


                                  

                                 
                           PSINET INC.
                            FORM 10-Q
                        SEPTEMBER 30, 1996
                                 
                            SIGNATURES
                                 

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.


                              PSINet Inc.


July 31, 1997                 By: /s/ Harold S. Wills
                                  ------------------------
                                  Harold S. Wills
                                  Executive Vice President,
                                  Chief Operating Officer
                                   and Director


July 31, 1997                 By: /s/ Edward D. Postal 
                                  ------------------------
                                  Edward D. Postal
                                  Vice President and Chief 
                                   Financial Officer
                                  (Principal Financial and  
                                   Chief Accounting Officer)


                            4


<PAGE>



                        EXHIBIT INDEX
                                 

Item 6 (a)  Exhibits:


Exhibit     Exhibit Name                                                Location

2        Joint Venture Agreement dated as of September 19,                  *
         1996 between the Company and Chatterjee Management
         Company

10.1     Registration Rights Agreement made as of September                **
         19, 1996 by and between the Company and The
         Chatterjee Management Company

10.2     Employment Agreement dated October 1, 1996 between                **
         the Company and Edward D. Postal

10.3     Employment Agreement dated October 1, 1996 between                **
         the Company and Richard R. Frizalone

10.4     Master Software/Equipment Lease Agreement dated as                **
         of September 20, 1996 between the Company and LPI
         Software Funding Group, Inc.

10.5     Amendment No. 1 to Asset Purchase Agreement and                   **
         Network Services Agreement entered into as of June
         28, 1996 by and between the Company and MindSpring
         Enterprises, Inc.

10.6     Amended and Restated Convertible Note of MindSpring               **
         Enterprises, Inc. in the principal amount of
         $2,000,000 due June 28, 1997

10.7     Convertible Note of MindSpring Enterprises, Inc. in               **
         the principal amount of $9,929,000 due September 1, 1997

10.8     Amendment No. 2 to Asset Purchase Agreement entered               **
         into as of September 1, 1996 by and between the
         company and MindSpring Enterprises, Inc.

11.1     Calculation of Loss per Share and Weighted Average                **
         Shares Used in Calculation for the Three Months
         Ended September 30, 1996

11.2     Calculation of Loss per Share and Average Shares                  **
         Used in Calculation for the Nine Months Ended
         September 30, 1996

27       Financial Data Schedule                                           **

99.1     Risk Factors                                                      **


*   This Exhibit has been filed in redacted form pursuant
    to a request for confidential treatment filed separately
    with the Commission pursuant to Rule 24b-2.

**  Previously filed with the Company's Quarterly Report on
    Form 10-Q for the quarterly period ended September 30,
    1996.



                                5