UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-Q


[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

For the transition period from                    to                   


                           Commission File #0-19220


                    Inland Land Appreciation Fund II, L.P. 
            (Exact name of registrant as specified in its charter)


         Delaware                                     #36-3664407
  (State or other jurisdiction      (I.R.S. Employer Identification Number) 
of incorporation or organization)


       2901 Butterfield Road, Oak Brook, Illinois         60521
        (Address of principal executive office)         (Zip Code)


    Registrant's telephone number, including area code:  630-218-8000


                                   N/A                        
                (Former name, former address and former fiscal
                      year, if changed since last report)


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   






                                      -1-



                    INLAND LAND APPRECIATION FUND II, L.P.
                            (a limited partnership)

                                Balance Sheets

                   September 30, 1996 and December 31, 1995
                                  (unaudited)



                                    Assets
                                    ------

                                                       1996          1995
                                                       ----          ----
Current assets:
  Cash and cash equivalents (Note 1).............. $ 3,885,605     5,097,705
  Investments in marketable securities (Note 1)...   2,025,000          -
  Accounts and accrued interest receivable........     145,330        19,900
  Deposits and other current assets...............      12,159         2,544
                                                   ------------  ------------
    Total current assets..........................   6,068,094     5,120,149
                                                   ------------  ------------

Investment properties (including acquisition
  fees paid to Affiliates of $2,028,936 and
  $2,049,707 at September 30, 1996 and December 31,
  1995, respectively) (Notes 1 and 3):
  Land and improvements...........................  40,354,280    40,799,412
  Buildings.......................................      93,082        93,082
                                                   ------------  ------------
                                                    40,447,362    40,892,494
  Less accumulated depreciation...................      11,506         9,179
                                                   ------------  ------------
Total investment properties, net of accumulated
  depreciation....................................  40,435,856    40,883,315
                                                   ------------  ------------
Total assets...................................... $46,503,950    46,003,464
                                                   ============  ============


















                See accompanying notes to financial statements.


                                      -2-



                    INLAND LAND APPRECIATION FUND II, L.P.
                            (a limited partnership)

                                Balance Sheets
                                  (continued)

                   September 30, 1996 and December 31, 1995
                                  (unaudited)



                       Liabilities and Partners' Capital
                       ---------------------------------

                                                       1996          1995
                                                       ----          ----
Current liabilities:
  Accounts payable................................ $    14,399        21,907
  Accrued real estate taxes.......................      77,948        97,271
  Due to Affiliates (Note 2)......................         402        11,167
  Unearned income.................................      53,218        29,898
                                                   ------------  ------------
    Total current liabilities.....................     145,967       160,243
                                                   ------------  ------------
Partners' capital (Notes 1 and 2):
  General Partner:
   Capital contribution...........................         500           500
   Cumulative net income..........................     448,864       447,723
   Cumulative cash distributions..................     (93,034)      (93,034)
                                                   ------------  ------------
                                                       356,330       355,189
                                                   ------------  ------------
  Limited Partners:
   Units of $1,000. Authorized 60,000 Units,
    50,184.52 and 50,193.52 Units outstanding
    as of September 30, 1996 and December 31,
    1995, respectively (net of offering costs of
    $7,532,439, of which $2,535,445 was paid
    to Affiliates)................................  42,655,371    42,663,992
   Cumulative net income..........................   6,183,245     5,660,948
   Cumulative cash distributions..................  (2,836,963)   (2,836,908)
                                                   ------------  ------------
                                                    46,001,653    45,488,032
                                                   ------------  ------------
    Total Partners' capital.......................  46,357,983    45,843,221
                                                   ------------  ------------
Total liabilities and Partners' capital........... $46,503,950    46,003,464
                                                   ============  ============








                See accompanying notes to financial statements.

                                      -3-



                    INLAND LAND APPRECIATION FUND II, L.P.
                            (a limited partnership)

                           Statements of Operations

        For the three and nine months ended September 30, 1996 and 1995
                                  (unaudited)


                                        Three months           Nine months
                                           ended                 ended
                                        September 30,         September 30,
                                        -------------         -------------
                                        1996      1995        1996      1995
                                        ----      ----        ----      ----
Income:
  Sale of investment properties
    (Notes 1 and 3)................ $  39,265    512,364  1,291,491  3,248,110
  Rental income (Note 4)...........    94,183    105,661    267,804    312,058
  Interest income..................    81,671     29,599    236,974     51,532
  Other income.....................       166       -           166      1,300
                                    ---------- ---------- ---------- ----------
                                      215,285    647,624  1,796,435  3,613,000
                                    ---------- ---------- ---------- ----------
Expenses:
  Cost of investment properties
    sold...........................    29,084    381,287    882,162  2,173,390
  Professional services to
    Affiliates.....................     6,793     12,981     16,734     32,959
  Professional services to
    non-affiliates.................       289        433     30,657     28,737
  General and administrative
    expenses to Affiliates.........    12,413     12,217     33,268     29,887
  General and administrative
    expenses to non-affiliates.....     3,813      4,249     32,966     16,078
  Marketing expenses to Affiliates.     9,192     13,261     35,569     59,875
  Marketing expenses to
    non-affiliates.................    37,034      5,645     45,621     15,668
  Land operating expenses to
    Affiliates.....................    22,712     24,453     69,092     74,706
  Land operating expenses to
    non-affiliates.................    46,736     37,840    124,601    111,440
  Depreciation.....................       776        775      2,327      2,327
                                    ---------- ---------- ---------- ----------
                                      168,842    493,141  1,272,997  2,545,067
                                    ---------- ---------- ---------- ----------
Net income......................... $  46,443    154,483    523,438  1,067,933
                                    ========== ========== ========== ==========








                See accompanying notes to financial statements.


                                      -4-



                    INLAND LAND APPRECIATION FUND II, L.P.
                            (a limited partnership)

                           Statements of Operations
                                  (continued)

        For the three and nine months ended September 30, 1996 and 1995
                                  (unaudited)


                                        Three months           Nine months
                                           ended                 ended
                                        September 30,         September 30,

                                        1996      1995        1996      1995
                                        ----      ----        ----      ----
Net income (loss) allocated to:
  General Partner.................. $     362        234      1,141        (68)
  Limited Partners.................    46,081    154,249    522,297  1,068,001
                                    ---------- ---------- ---------- ----------
Net income......................... $  46,443    154,483    523,438  1,067,933
                                    ========== ========== ========== ==========

Net income (loss) allocated to the
  one General Partner Unit......... $     362        234      1,141        (68)
                                    ========== ========== ========== ==========
Net income per weighted average
  Limited Partner Unit (50,197
  and 50,224 for the three months
  ended September 30, 1996 and 1995,
  respectively, and 50,196 and
  50,228 for the nine months
  ended September 30, 1996 and 1995,
  respectively).................... $     .92       3.07      10.41      21.26
                                    ========== ========== ========== ==========





















                 See accompanying notes to financial statements.


                                      -5-



                     INLAND LAND APPRECIATION FUND II, L.P.
                             (a limited partnership)

                            Statements of Cash Flows

              For the nine months ended September 30, 1996 and 1995
                                   (unaudited)


                                                       1996          1995
                                                       ----          ----
Cash flows from operating activities:
  Net income...................................... $   523,438     1,067,933
  Adjustments to reconcile net income to net
      cash used in operating activities:
    Depreciation..................................       2,327         2,327
    Gain on sale of investment properties.........    (409,329)   (1,074,720)
    Changes in assets and liabilities:
      Accounts and accrued interest receivable....    (125,430)      (88,426)
      Deposits and other current assets...........      (9,615)       (2,832)
      Accounts payable............................      (7,508)       (3,278)
      Accrued real estate taxes...................     (19,323)      (28,909)
      Due to Affiliates...........................     (10,765)       13,515
      Unearned income.............................      23,320       (21,728)
                                                   ------------  ------------
Net cash used in operating activities.............     (32,885)     (136,118)
                                                   ------------  ------------
Cash flows from investing activities:
  Additions to investment properties..............    (437,030)   (1,626,141)
  Sale (purchase) of marketable securities, net...  (2,025,000)         -
  Proceeds from sale of investment properties.....   1,291,491     3,248,110
                                                   ------------  ------------
Net cash provided by (used in) investing
  activities......................................  (1,170,539)    1,621,969
                                                   ------------  ------------
Cash flows from financing activities:
  Cash distributions..............................        -       (1,000,000)
  Foreign Partners' withholding...................         (55)         -
  Repurchase of Limited Partnership Units.........      (8,621)       (7,762)
                                                   ------------  ------------
Net cash used in financing activities.............      (8,676)   (1,007,762)
                                                   ------------  ------------
Net increase (decrease) in cash
  and cash equivalents............................  (1,212,100)      478,089
Cash and cash equivalents at beginning of
  period..........................................   5,097,705       896,813
                                                   ------------  ------------
Cash and cash equivalents at end of period........ $ 3,885,605     1,374,902
                                                   ============  ============









                See accompanying notes to financial statements.

                                      -6-



                    INLAND LAND APPRECIATION FUND II, L.P.
                            (a limited partnership)

                         Notes to Financial Statements

                              September 30, 1996
                                  (unaudited)


Readers of this  Quarterly  Report  should  refer  to the Partnership's audited
financial statements for the  fiscal  year  ended  December 31, 1995, which are
included  in  the  Partnership's  1995   Annual  Report,  as  certain  footnote
disclosures which would substantially duplicate those contained in such audited
financial statements have been omitted from this Report.

(1)  Organization and Basis of Accounting

Inland Land Appreciation Fund  II,  L.P.  (the  "Partnership") was organized on
June 28, 1989 by the filing  of  a Certificate of Limited Partnership under the
Revised Uniform Limited Partnership Act of  the  State of Delaware.  On October
25, 1989, the Partnership commenced an  Offering of 30,000 (subject to increase
to 60,000) Limited  Partnership  Units  pursuant  to  a  Registration under the
Securities Act of 1933.    The  Offering  terminated  on October 24, 1991, with
total sales of 50,476.17 Units at  $1,000 per Unit, resulting in $50,476,170 in
gross offering proceeds, not  including  the  General Partner's contribution of
$500.  All of the holders of these Units have been admitted to the Partnership.
As of September 30, 1996,  the  Partnership  has  repurchased a total of 291.65
Units for $288,360 from  various  Limited  Partners through the Unit Repurchase
Program.  Under this program,  Limited Partners may under certain circumstances
have their Units repurchased  for  an  amount  equal to their Invested Capital.
Inland Real Estate Investment Corporation is the General Partner.

The preparation of financial  statements  in conformity with generally accepted
accounting principles requires  management  to  make  estimates and assumptions
that affect the reported amounts  of  assets  and liabilities and disclosure of
contingent assets and liabilities at  the  date of the financial statements and
the reported amounts of  revenues  and  expenses  during the reporting periods.
Actual results could differ from those estimates.

Offering costs have been offset against the Limited Partners' capital accounts.

The Partnership  considers  all  highly  liquid  investments  purchased  with a
maturity of three months or  less  to  be  cash  equivalents and are carried at
cost, which approximates fair value  because  of the relative short maturity of
these instruments.

Investments purchased with a maturity of three months or more are considered to
be  investments  in  marketable  securities  and  are  carried  at  cost, which
approximates fair value.








                                      -7-



                    INLAND LAND APPRECIATION FUND II, L.P.
                            (a limited partnership)

                         Notes to Financial Statements
                                  (continued)

                              September 30, 1996
                                  (unaudited)



Investment properties held  by  the  Partnership  are  carried  at the lower of
aggregate cost or net realizable  value.  Periodically, the Partnership reviews
the portfolio and if management  determines that parcels suffered an impairment
in value which is deemed to be  other than temporary, the carrying value of the
parcels would be reduced to their  net realizable value.  Through September 30,
1996, there were no such impairments.

For  vacant  land  parcels   and   parcels  with  insignificant  buildings  and
improvements,  the  Partnership  uses  the  area  method  of  allocation, which
approximates relative sales method of  allocation,  whereby a per acre price is
used as the standard allocation method for land purchases and sales.  The total
cost of the parcel is divided by the  total  number of acres to arrive at a per
acre price.  For  parcels  with  significant buildings and improvements (Parcel
24,  described  in  Note  3),   the   Partnership  records  the  buildings  and
improvements  at  a  cost  based  upon  the  appraised  value  at  the  date of
acquisition.  Building and improvements are depreciated using the straight-line
method of  depreciation  over  a  useful  life  of  thirty  years.   Repair and
maintenance expenses  are  charged  to  operations  as  incurred.   Significant
improvements are capitalized and depreciated over their estimated useful lives.

No provision for Federal income taxes  has  been made as the liability for such
taxes is that of the Partners rather than the Partnership.

Statement of  Financial  Accounting  Standards  No.  121,  "Accounting  for the
Impairment of Long-Lived Assets to Be Disposed Of" was issued in March 1995 and
is  effective  for  fiscal  years  beginning  after  December  15,  1995.  This
pronouncement is not  expected  to  have  a  material  effect  on the financial
position or results of operations of the Partnership.

In  the  opinion  of  management,  the  financial  statements  contain  all the
adjustments necessary, which  are  of  a  normal  recurring  nature, to present
fairly  the  financial  position  and  results  of  operations  for  the period
presented herein.  Results of interim periods are not necessarily indicative of
results to be expected for the year.












                                      -8-



                    INLAND LAND APPRECIATION FUND II, L.P.
                            (a limited partnership)

                         Notes to Financial Statements
                                  (continued)

                              September 30, 1996
                                  (unaudited)



(2)  Transactions with Affiliates

The General  Partner  and  its  Affiliates  are  entitled  to reimbursement for
salaries and expenses of employees  of  the  General Partner and its Affiliates
relating to the administration of the  Partnership.  Such costs are included in
professional services to Affiliates and  general and administrative expenses to
Affiliates, of which $402 and $7,536  was  unpaid  as of September 30, 1996 and
December 31, 1995, respectively.

The General Partner is entitled to  receive Asset Management Fees equal to one-
quarter of 1% of  the  original  cost  to  the  Partnership of undeveloped land
annually, limited to a cumulative total over  the life of the Partnership of 2%
of the land's original  cost  to  the  Partnership.    Such fees of $69,092 and
$74,706 have been incurred for  the  nine  months  ended September 30, 1996 and
1995, respectively, and are included  in land operating expenses to Affiliates,
all of which have been paid.

An  Affiliate  of  the  General  Partner  performed  marketing  and advertising
services of the Partnership's land investments and was reimbursed (as set forth
under terms of the  Partnership  Agreement)  for  direct  costs.  Such costs of
$35,569 and $59,875 have been  incurred  and are included in marketing expenses
to  Affiliates  for  the  nine  months  ended  September  30,  1996  and  1995,
respectively, of which $0 and $3,631  was  unpaid  as of September 30, 1996 and
December 31, 1995, respectively.

An Affiliate of  the  General  Partner  performed  property upgrades, rezoning,
annexation and other activities  to  prepare the Partnership's land investments
for sale and  was  reimbursed  (as  set  forth  under  terms of the Partnership
Agreement)  for salaries and direct costs.  The Affiliate did not take a profit
on any project.  Such costs of  $34,957  and $13,772 have been incurred for the
nine months ended September 30,  1996  and 1995, respectively, and are included
in investment properties, all of which have been paid.

Through the Partnership's participation  in  an  insurance program, claims from
the Partnership's properties,  as  well  as  properties  owned by other limited
partnerships syndicated by  Affiliates,  were  managed  through  a loss reserve
trust.  For the nine months ended  September 30, 1996 and 1995, the Partnership
paid $4,142 and $4,750, respectively,  to  the  loss reserve trust for the land
parcels.







                                      -9-



                    INLAND LAND APPRECIATION FUND II, L.P.
                            (a limited partnership)

                         Notes to Financial Statements
                                  (continued)

(3) Investment Properties

The following real  property  investments  are  owned  by  the Partnership as
of September 30, 1996:
                                                                
                   Gross                                        
                   Acres   Purchase/               Initial Costs           
Parcel Location: Purchased   Sales      Original   Acquisition   
  #      County    /Sold      Date        Costs       Costs        Total    
   1     McHenry  372.759   04/25/90 $ 2,114,295      114,070    2,228,365

   2     Kendall   41.118   07/06/90     549,639       43,889      593,528

   3     Kendall  120.817   11/06/90   1,606,794      101,863    1,708,657

   4     Kendall  299.025   06/28/91   1,442,059       77,804    1,519,863

   5     Kane     189.0468  02/28/91   1,954,629       94,569    2,049,198

   6     Lake      57.3345  04/16/91     904,337       71,199      975,536
                    (.258)  10/01/94

   7     McHenry   56.7094  04/22/91     680,513       44,444      724,957

   8     Kane     325.394   06/14/91   3,496,700      262,275    3,758,975
                    (.870)  04/03/96

   9     Will       9.867   08/13/91     217,074          988      218,062

  10     Will     150.66    08/20/91   1,866,716       89,333    1,956,049

  11     Will     138.447   08/20/91     289,914       20,376      310,290
                 (138.447)  05/03/93

  12     Will      44.732   08/20/91     444,386       21,988      466,374

  13     Will       6.342   09/23/91     139,524          172      139,696
                   (6.342)  05/03/93

  14     Kendall   44.403   09/03/91     888,060       68,210      956,270

  15     Kendall  100.364   09/04/91   1,050,000       52,694    1,102,694
                   (5.000)  09/01/93
                  (11.000)  12/01/94

  16     McHenry  168.905   09/13/91   1,402,058       69,731    1,471,789

  17     Kendall    3.462   10/30/91     435,000       22,326      457,326

  18     McHenry  139.1697  11/07/91   1,160,301       58,190    1,218,491
                                     ------------ ------------ ------------
        Subtotal                     $20,641,999    1,214,121   21,856,120

                                                      Total                     
           Costs                     Remaining       Current
        Capitalized     Costs of      Costs of      Year Gain
Parcel Subsequent to    Property     Parcels at      on Sale
  #     Acquisition       Sold        9/30/96       Recognized 
   1         195,328         -        2,423,693           -

   2           7,160         -          600,688           -

   3           5,741         -        1,714,398           -

   4             510         -        1,520,373           -

   5         142,137         -        2,191,335           -

   6          15,782        4,457       986,861           -

   7         299,614         -        1,024,571           -

   8          24,020       10,000     3,772,995           -

   9             869         -          218,931           -

  10             122         -        1,956,171           -

  11           2,700      312,990          -              -

  12              40         -          466,414           -

  13            -         139,696          -              -

  14             460         -          956,730           -

  15          17,867      177,298       943,263           -

  16          79,806         -        1,551,595           -

  17             231         -          457,557           -

  18         204,549         -        1,423,040           -
       -------------- ------------  ------------   ------------
             996,936      644,441    22,208,615           -

                                     -10-




                            INLAND LAND APPRECIATION FUND II, L.P.
                                  (a limited partnership)

                               Notes to Financial Statements
                                        (continued)

(3) Investment Properties (continued)
                                                                
                   Gross                                        
                   Acres   Purchase/               Initial Costs           
Parcel Location: Purchased   Sales      Original   Acquisition   
  #      County    /Sold      Date        Costs       Costs        Total    
        Subtotal                      $20,641,999    1,214,121   21,856,120

  19       Kane   436.236   12/13/91    4,362,360      321,250    4,683,610

  20       Kane &
         Kendall  400.129   01/31/92    1,692,623      101,318    1,793,941

  21     Kendall   15.013   05/26/92      250,000       23,844      273,844

  22     Kendall  391.959   10/30/92    3,870,000      283,186    4,153,186
                  (10.000)  01/06/94
                   (5.538)  01/05/96

  23 (c) Kendall  133.2074  10/30/92    3,231,942      251,373    3,483,315
                  (11.525)  07/16/93
                  (56.53)   Var 1995
                   (6.08)   Var 1996

  23A(a) Kendall     .2676  10/30/92      170,072       12,641      182,713
                    (.2676) 03/16/93

  24     Kendall    3.908   01/21/93      645,000       56,316      701,316

  24A(b) Kendall     .406   01/21/93      155,000       13,533      168,533

  25     Kendall  656.687   01/28/93    1,625,000       82,536    1,707,536
                 (656.687)  10/31/95

  26     Kane      89.511   03/10/93    1,181,555       89,312    1,270,867

  27     Kendall   83.525   03/11/93      984,474       54,846    1,039,320
                                      ------------ ------------ ------------
                                      $38,810,025    2,504,276   41,314,301
                                      ============ ============ ============

                                                                                
                                                       Total
           Costs                      Remaining      Current
        Capitalized     Costs of       Costs of     Year Gain
Parcel Subsequent to    Property      Parcels at     on Sale
  #     Acquisition       Sold         9/30/96      Recognized 
             996,936      644,441    22,208,615          -

  19         113,920         -        4,797,530          -

  20          38,743         -        1,832,684          -

  21           6,229         -          280,073          -

  22          89,862      164,804     4,078,244        94,270
       
  23       4,245,442    3,712,086     4,016,671       315,059
  
  23A           -         182,713          -             -
  
  24             427         -          701,743          -

  24A(b)        -            -          168,533          -

  25          22,673    1,730,209          -             -
       
  26          52,640         -        1,323,507          -

  27             442         -        1,039,762          -
       -------------- ------------  ------------   -----------
           5,567,314    6,434,253    40,447,362       409,329
       ============== ============  ============   ===========


(a) Included in the purchase of Parcel  23  was a newly constructed 2,500
    square foot house. The house, located at 213  Stonemill Lane in the Mill
    Race Creek Subdivision, was sold in March 1993.

(b) Included in the  purchase  of  Parcel  24  was  a  2,400  square foot
    office building.

(c) Parcel 23, annexed and  zoned  to  Oswego  as  part  of  the Mill Race
    Creek subdivision, consists of two  parts:  a  28-acre  multi-family
    portion and a 105-acre single-family  portion.  The  Partnership  sold
    the 28-acre multi-family portion on June 7, 1995 and as  of September 30,
    1996, 102 of the 243 single-family lots.  Of  the  141  remaining
    single-family  lots, 132 are under contract for sale with  homebuilders.
    Under the purchase schedules, these lots would be sold by April 1997.


                                     -11-



                    INLAND LAND APPRECIATION FUND II, L.P.
                            (a limited partnership)

                         Notes to Financial Statements
                                  (continued)

                              September 30, 1996
                                  (unaudited)



(3) Investment Properties (continued)

(d) Reconciliation of real estate owned:
                                                        1996         1995
                                                        ----         ----
  Balance at January 1,........................... $40,892,494    43,264,960
  Additions during period:
  Improvements....................................     437,030     2,257,644
                                                   ------------  ------------
                                                    41,329,524    45,522,604
  Sales during period.............................     882,162     4,630,110
                                                   ------------  ------------
  Balance at end of period........................ $40,447,362    40,892,494
                                                   ============  ============

(e) Reconciliation of accumulated depreciation:
                                                        1996         1995
                                                        ----         ----
  Balance at January 1,........................... $     9,179         6,076
  Depreciation expense............................       2,327         3,103
  Sales during period.............................        -             -
                                                   ------------  ------------
  Balance at end of period........................ $    11,506         9,179
                                                   ============  ============

(4) Farm Rental Income

The Partnership has determined that all leases relating to the farm parcels are
operating leases.  Accordingly, rental income is reported when earned.

As of September 30, 1996, the Partnership had farm leases of generally one year
in duration, for approximately  3,094  acres  of  the approximately 3,571 acres
owned.













                                     -12-



Item 2.  Management's  Discussion  and  Analysis  of  Financial  Condition  and
         Results of Operations


Liquidity and Capital Resources

On October 25, 1989, the  Partnership  commenced an Offering of 30,000 (subject
to increase to 60,000)  Limited  Partnership  Units  pursuant to a Registration
Statement on  Form  S-11  under  the  Securities  Act  of  1933.   The Offering
terminated on October 24, 1991, with  total  sales of 50,476.17 Units at $1,000
per Unit, resulting in  $50,476,170  in  gross offering proceeds, not including
the General Partner's contribution of $500. All the holders of these Units have
been admitted to the Partnership.  The Limited Partners of the Partnership will
share in their  portion  of  benefits  of  ownership  of the Partnership's real
property investments according to the number of Units held.

The Partnership used $41,314,301 of gross  offering proceeds to purchase, on an
all-cash basis, twenty-seven  parcels  of  undeveloped  land and two buildings.
These investments included the payment  of the purchase price, acquisition fees
and acquisition costs of such properties.   Three of the parcels were purchased
during 1990, sixteen during 1991, four during 1992 and four during 1993.  As of
September 30, 1996, the Partnership has had multiple sales transactions through
which it has disposed  of  approximately  909  acres of the approximately 4,480
acres originally owned.   As  of  September  30, 1996, cumulative distributions
have totaled $2,836,963 to  the  Limited  Partners  and  $93,034 to the General
Partner.  Of the $2,836,963 distributed to the Limited Partners, $2,115,963 was
net sales proceeds (which represents  a  return of Invested Capital, as defined
in the  Partnership  Agreement)  and  $721,000  was  from  operations.    As of
September 30, 1996,  the  Partnership  has  used  $5,567,314 of working capital
reserve for rezoning  and  other  activities  and  such  amount  is included in
investment properties.

The Partnership's capital needs and resources will vary depending upon a number
of factors, including the extent to which the Partnership conducts rezoning and
other  activities  relating  to  utility  access,  the  installation  of roads,
subdivision and/or annexation of land to a municipality, changes in real estate
taxes affecting the Partnership's land, and the amount of revenue received from
leasing.  As of September 30, 1996,  the Partnership owns, in whole or in part,
twenty-four of its original parcels  and  one  office building, the majority of
which are leased to local tenants  and are generating sufficient cash flow from
leases to cover property taxes and insurance.

At  September  30,  1996,  the  Partnership  had  cash,  cash  equivalents  and
investments in  marketable  securities  of  $5,910,605,  of which approximately
$291,000 is reserved for the  repurchase  of  Units through the Unit Repurchase
Program.  The remaining $5,619,605 is  available to be used for the Partnership
expenses and liabilities, cash  distributions  to partners and other activities
with respect to some or  all  of  its  land  parcels.  The Partnership plans to
maximize its parcel sales effort in anticipation of rising land values.








                                     -13-



The Partnership plans to enhance the  value of its land through pre-development
activities such as rezoning, annexation and land planning.  The Partnership has
already been successful in, or  is  in the process of, pre-development activity
on a majority of the Partnership's land  investments.  Parcel 1, annexed to the
Village of Huntley and  zoned  for  residential and commercial development, has
improvements underway and sites are being marketed to potential buyers.  Parcel
7, annexed to the Village  of  McHenry  and zoned residential, has improvements
underway and sites are being marketed to potential buyers. Parcel 18, zoned for
multi- and single-family use, is being marketed to potential homebuilders.

Results of Operations

The sale of investment properties income and cost of investment properties sold
recorded for the three and nine months  ended September 30, 1996 is a result of
the continued lot sales at  the  Ponds  of  Mill Race Creek Subdivision (Parcel
23), the sale of approximately 5 1/2  acres of Parcel 22 during January of 1996
and a roadway easement of approximately  4  1/2  acres of Parcel 8 during April
1996.   The  sale  of  investment  properties  income  and  cost  of investment
properties sold recorded for the three and nine months ended September 30, 1995
is a result of sales at  the  Mill  Race  Creek Subdivision (Parcel 23).  As of
September 30, 1996, the Partnership has  sold 102 of the 243 single-family lots
at The Ponds of Mill Race Creek.

As of September 30,  1996,  the  Partnership  owned twenty-four parcels of land
consisting of  approximately  3,571  acres  and  one  office  building.  Of the
approximately 3,571 acres owned, 3,094  acres  are  leased to local farmers and
are generating sufficient  cash  flow  to  cover  property taxes, insurance and
other miscellaneous expenses.  The decrease in rental income and land operating
expenses to Affiliates for the three  and nine months ended September 30, 1996,
as compared to the three and  nine  months  ended September 30, 1995, is due to
the decrease of the land portfolio as a  result of land sales.  The decrease in
rental income was partially offset by the annual increase in lease amounts from
tenants.  Land operating expenses to non-affiliates increased for the three and
nine months ended September 30, 1996, as  compared to the three and nine months
ended September 30, 1995, due  to  an  increase  in assessment fees and grounds
maintenance relating to  Parcel  23.    This  increase  was partially offset by
decreases in repair and maintenance, insurance and real estate taxes.

Interest income increased for  the  three  and  nine months ended September 30,
1996, as compared to the three and nine months ended September 30, 1995, due to
the Partnership replenishing its  working  capital  reserve, primarily from the
sales at Parcel 23 and the sale of Parcel 25 and an increase in interest rates.

Professional services to Affiliates  decreased  for  the  three and nine months
ended September 30,  1996,  as  compared  to  the  three  and nine months ended
September 30,  1995,  due  to  a  decreases  in  legal  and accounting services
required by the Partnership.  Professional services to non-affiliates increased
for the nine months ended September  30,  1996,  as compared to the nine months
ended September  30,  1995,  due  primarily  to  an  increase  in outside legal
services.







                                     -14-



General and administrative expenses to  Affiliates  increased for the three and
nine months ended September 30, 1996, as  compared to the three and nine months
ended September 30, 1995,  due  primarily  to  an  increase in investor service
expenses.  General and administrative  expenses to non-affiliates increased for
the nine months ended September 30, 1996,  as compared to the nine months ended
September 30, 1995, due primarily  to  an  increase in the Illinois Replacement
Tax owed by the Partnership in 1996.

Marketing expenses to Affiliates decreased for  the three and nine months ended
September 30, 1996, as compared  to  the  three and nine months ended September
30, 1995, due to a decrease  in  expenses relating to marketing and advertising
the Partnership's  land  investments.    Marketing  expenses  to non-affiliates
increased for the three and nine  months  ended September 30, 1996, as compared
to the three and nine months  ended  September  30, 1995, due to an increase in
advertising and travel expenses  relating  to  marketing  the land portfolio to
prospective purchasers.




                          PART II - Other Information

Items 1 through 5 are omitted because  of the absence of conditions under which
they are required.

Item 6.  Exhibits and Reports on Form 8-K

     (a) Exhibits:

         (27) Financial Data Schedule

     (b) Reports on Form 8-K:

         None























                                     -15-



                                  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.



                            INLAND LAND APPRECIATION FUND II, L.P.

                            By:   Inland Real Estate Investment Corporation
                                  General Partner


                                  /S/ ROBERT D. PARKS

                            By:   Robert D. Parks
                                  Chairman
                            Date: November 13, 1996


                                  /S/ PATRICIA A. CHALLENGER

                            By:   Patricia A. Challenger
                                  Senior Vice President
                            Date: November 13, 1996


                                  /S/ KELLY TUCEK

                            By:   Kelly Tucek
                                  Principal Financial Officer and
                                  Principal Accounting Officer
                            Date: November 13, 1996





















                                     -16-