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, 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 #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         60523
        (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, 1998 and December 31, 1997
                                  (unaudited)



                                    Assets
                                    ------

                                                       1998          1997
Current assets:                                        ----          ----
  Cash and cash equivalents (Note 1).............. $ 3,192,981       961,428
  Short-term investments (Note 1).................        -          431,682
  Accounts and accrued interest receivable........     136,050        25,065
  Other current assets............................       8,527         2,380
                                                   ------------  ------------
Total current assets..............................   3,337,558     1,420,555
                                                   ------------  ------------

Mortgage loans receivable (Note 5)................   2,750,000          -
Investment properties (including acquisition
  fees paid to Affiliates of $1,927,812 and
  $2,003,096 at September 30, 1998 and December
  31, 1997, respectively) (Notes 1 and 3):
  Land and improvements...........................  39,550,739    41,765,589
  Buildings.......................................      93,082        93,082
                                                   ------------  ------------
                                                    39,643,821    41,858,671
  Less accumulated depreciation...................      17,711        15,384
Total investment properties, net of accumulated    ------------  ------------
  depreciation....................................  39,626,110    41,843,287
                                                   ------------  ------------
Total assets...................................... $45,713,668    43,263,842
                                                   ============  ============

















                See accompanying notes to financial statements.


                                      -2-


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

                                Balance Sheets
                                  (continued)

                   September 30, 1998 and December 31, 1997
                                  (unaudited)



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

                                                       1998          1997
                                                       ----          ----
Current liabilities:
  Accounts payable................................ $    13,992        21,221
  Accrued real estate taxes.......................      77,644       100,993
  Due to Affiliates (Note 2)......................      40,506        12,450
  Unearned income.................................      10,030       109,669
                                                   ------------  ------------
Total current liabilities.........................     142,172       244,333
                                                   ------------  ------------
Deferred gain on sale (Note 5)....................   1,701,090          -

Partners' capital (Notes 1 and 2):
  General Partner:
   Capital contribution...........................         500           500
   Cumulative net income..........................     450,766       449,454
   Cumulative cash distributions..................     (93,034)      (93,034)
                                                   ------------  ------------
                                                       358,232       356,920
  Limited Partners:                                ------------  ------------
   Units of $1,000. Authorized 60,000 Units,
    50,119.52 and 50,164.52 Units outstanding
    as of September 30, 1998 and December 31,
    1997, respectively (net of offering costs of
    $7,532,439, of which $2,535,445 was paid
    to Affiliates)................................  42,597,492    42,637,010
   Cumulative net income..........................   7,751,435     6,862,332
   Cumulative cash distributions..................  (6,836,753)   (6,836,753)
                                                   ------------  ------------
                                                    43,512,174    42,662,589
                                                   ------------  ------------
Total Partners' capital...........................  43,870,406    43,019,509
                                                   ------------  ------------
Total liabilities and Partners' capital........... $45,713,668    43,263,842
                                                   ============  ============







                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, 1998 and 1997
                                  (unaudited)


                                        Three months           Nine months
                                           ended                 ended
                                        September 30,         September 30,
                                        -------------         -------------
                                       1998       1997       1998       1997
Income:                                ----       ----       ----       ----
  Sale of investment properties
    (Notes 1 and 3)................ $2,241,271   367,870  3,544,010  1,414,487
  Rental income (Note 4)...........     92,933    90,731    277,413    274,441
  Interest income..................     71,460    25,076    124,326    175,583
  Other income.....................       -           20    160,057         20
                                    ---------- ---------- ---------- ----------
                                     2,405,664   483,697  4,105,806  1,864,531
                                    ---------- ---------- ---------- ----------
Expenses:
  Cost of investment properties
    sold...........................  1,859,588   241,073  2,784,808    834,974
  Professional services to
    Affiliates.....................     12,336    10,200     28,521     28,794
  Professional services to
    non-affiliates.................        207       340     32,166     52,559
  General and administrative
    expenses to Affiliates.........      1,200     5,120     10,948     21,347
  General and administrative
    expenses to non-affiliates.....      4,805     4,004     23,891     25,093
  Marketing expenses to Affiliates.     12,484    33,147     21,369    100,483
  Marketing expenses to
    non-affiliates.................     37,548    51,970     98,687    104,541
  Land operating expenses to
    Affiliates.....................     22,286    22,778     67,636     68,532
  Land operating expenses to
    non-affiliates.................     60,128    46,501    145,038    117,516
  Depreciation.....................        775       776      2,327      2,327
                                    ---------- ---------- ---------- ----------
                                     2,011,357   415,909  3,215,391  1,356,166
                                    ---------- ---------- ---------- ----------
Net income......................... $  394,307    67,788    890,415    508,365
                                    ========== ========== ========== ==========








                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, 1998 and 1997
                                  (unaudited)


                                        Three months           Nine months
                                           ended                 ended
                                        September 30,         September 30,
                                        -------------         -------------
                                       1998       1997       1998       1997
Net income (loss) allocated to:        ----       ----       ----       ----
  General Partner.................. $     126       (590)     1,312       (711)
  Limited Partners.................   394,181     68,378    889,103    509,076
                                    ---------- ---------- ---------- ----------
Net income......................... $ 394,307     67,788    890,415    508,365
                                    ========== ========== ========== ==========

Net income (loss) allocated to the
  one General Partner Unit......... $     126       (590)     1,312       (711)
                                    ========== ========== ========== ==========
Net income per Unit, basic and
  diluted, allocated to Limited
  Partners per weighted average
  Limited Partnership Units (50,133.00
  and 50,164.52 for the three months
  ended September 30, 1998 and 1997,
  respectively, and 50,152.78 and
  50,175.55 for the nine months
  ended September 30, 1998 and 1997,
  respectively).................... $    7.86       1.37      17.73      10.15
                                    ========== ========== ========== ==========



















                 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, 1998 and 1997
                                   (unaudited)

                                                       1998          1997
Cash flows from operating activities:                  ----          ----
  Net income...................................... $   890,415       508,365
  Adjustments to reconcile net income to net cash
      used in operating activities:
    Depreciation..................................       2,327         2,327
    Gain on sale of investment properties.........    (759,202)     (579,513)
    Changes in assets and liabilities:
      Accounts and accrued interest receivable....    (110,985)     (120,235)
      Other current assets........................      (6,147)       (1,288)
      Accounts payable............................      (7,229)      (44,612)
      Accrued real estate taxes...................     (23,349)      (28,097)
      Due to Affiliates...........................      28,056        67,393
      Unearned income.............................     (99,639)       16,082
                                                   ------------  ------------
Net cash used in operating activities.............     (85,753)     (179,578)
                                                   ------------  ------------
Cash flows from investing activities:
  Additions to investment properties..............    (569,958)   (1,673,834)
  Sale (purchase) of short-term investments, net..     431,682     1,475,465
  Proceeds from sale of investment properties.....   2,495,100     1,414,487
                                                   ------------  ------------
Net cash provided by investing activities.........   2,356,824     1,216,118
                                                   ------------  ------------
Cash flows from financing activities:
  Cash distributions..............................        -       (4,000,000)
  Repurchase of Limited Partnership Units.........     (39,518)      (18,361)
                                                   ------------  ------------
Net cash used in financing activities.............     (39,518)   (4,018,151)
Net increase (decrease) in cash and                ------------  ------------
  cash equivalents................................   2,231,553    (2,981,611)
Cash and cash equivalents at beginning of
  period..........................................     961,428     3,904,046
                                                   ------------  ------------
Cash and cash equivalents at end of period........ $ 3,192,981       922,435
                                                   ============  ============

Supplemental schedule of non-cash investing activities:
  Mortgage loans receivable....................... $(2,750,000)         -
  Reduction of investment properties..............   2,784,808          -
  Deferred gain on sale...........................   1,701,090          -
  Gain on sale of land............................     759,202          -
                                                   ------------  ------------
Proceeds from sale of investment properties....... $ 2,495,100          -
                                                   ============  ============

                See accompanying notes to financial statements.



                                      -6-


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

                         Notes to Financial Statements

                              September 30, 1998
                                  (unaudited)


Readers of this  Quarterly  Report  should  refer  to the Partnership's audited
financial statements for the  fiscal  year  ended  December 31, 1997, which are
included  in  the  Partnership's  1997   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

The Registrant, Inland Land Appreciation  Fund II, L.P. (the "Partnership"), is
a limited partnership formed on June 28, 1989, pursuant to the Delaware Revised
Uniform Limited Partnership Act, to  invest  in undeveloped land on an all-cash
basis and realize appreciation of such  land  upon resale. 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  Amended  and  Restated  Agreement  of  Limited  Partnership (the
"Partnership Agreement") provides for Inland Real Estate Investment Corporation
to be the General Partner. On  October 24, 1991, the Partnership terminated its
Offering of Units, 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 capital contribution of $500. All  of the holders of these Units have
been admitted to the Partnership. As of September 30, 1998, the Partnership has
repurchased a total of 356.65 Units  for $346,239 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.

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 market.

Investments purchased with a maturity of three months or more are considered to
be short-term investments and are carried at cost, which approximates market.








                                      -7-


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

                         Notes to Financial Statements
                                  (continued)

                              September 30, 1998
                                  (unaudited)


Statement of Financial Accounting Standards  No.  121 ("SFAS 121") requires the
Partnership to record  an  impairment  loss  on  its  property  to  be held for
investment whenever  its  carrying  value  cannot  be  fully  recovered through
estimated undiscounted future cash flows  from  their operations and sale.  The
amount of the impairment loss to  be recognized would be the difference between
the property's carrying value and the  property's  estimated fair value.  As of
September 30, 1998, the Partnership has not recognized any such impairment.

For  vacant  land  parcels   and   parcels  with  insignificant  buildings  and
improvements,  the  Partnership  uses  the  area  method  of  allocation, which
approximates the 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.

Statement of Financial Accounting  Standards  No.  128 "Earnings per Share" was
adopted by the Partnership for the  year  ended  December 31, 1997 and has been
applied to all prior  earnings  periods  presented in the financial statements.
The Partnership has no dilutive securities.

The Partnership is required to  pay  a  withholding tax to the Internal Revenue
Service with  respect  to  a  Partner's  allocable  share  of the Partnership's
taxable net income, if the  Partner  is  a foreign person. The Partnership will
first pay the withholding tax  from  the  distributions to any foreign partner,
and to the extent that the tax exceeds the amount of distributions withheld, or
if there have been no distributions  to  withhold, the excess will be accounted
for as a distribution to the foreign partner. Withholding tax payments are made
every April, June, September and December.

No provision for Federal income taxes  has  been made as the liability for such
taxes is that of the Partners rather than 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, 1998
                                  (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 and general and administrative expenses to Affiliates, of
which $12,724 and $3,977 was unpaid  as  of September 30, 1998 and December 31,
1997, 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 $67,636 and
$68,532 have been incurred and  paid  for  the  nine months ended September 30,
1998 and 1997, respectively,  and  are  included  in land operating expenses to
Affiliates.

An Affiliate of the General  Partner  performed sales marketing and advertising
services for the Partnership and  was  reimbursed  (as set forth under terms of
the Partnership  Agreement)  for  direct  costs.    Such  costs  of $21,369 and
$100,483  have  been  incurred  and  are  included  in  marketing  expenses  to
Affiliates for the nine months ended September 30, 1998 and 1997, respectively,
of which $12,027 and $8,473 was  unpaid  as  of September 30, 1998 and December
31, 1997, 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 recognize a
profit on any project.   Such  costs  are included in investment properties, of
which $15,755 was unpaid as of September 30, 1998.

















                                      -9-


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

                                             Notes to Financial Statements
                                                      (continued)

(3) Investment Properties
<CAPTION>

                                                                                                              Total
                   Gross                            Initial Costs                 Costs                     Remaining    Current
                   Acres    Purchase/  --------------------------------------  Capitalized     Costs of      Costs of   Year Gain
       Location: Purchased    Sales       Original  Acquisition     Total     Subsequent to    Property     Parcels at   on Sale
Parcel  County    (Sold)      Date         Costs       Costs        Costs      Acquisition       Sold        9/30/98    Recognized
------ --------- ---------- ---------- ------------ ------------ ------------ -------------- ------------ ------------ ------------
<S>     <C>      <C>         <C>         <C>          <C>          <C>           <C>          <C>            <C>          <C>
   1     McHenry  372.759   04/25/90 $ 2,114,295      114,070    2,228,365        509,332         -       2,737,697         -

   2     Kendall   41.118   07/06/90     549,639       43,889      593,528          8,164         -         601,692         -

   3     Kendall  120.817   11/06/90   1,606,794      101,863    1,708,657          9,815         -       1,718,472         -

   4     Kendall  299.025   06/28/91   1,442,059       77,804    1,519,863          2,493         -       1,522,356         -

   5     Kane     189.0468  02/28/91   1,954,629       94,569    2,049,198        181,644         -       2,230,842         -

   6     Lake      57.3345  04/16/91     904,337       71,199      975,536         18,362        4,457      989,441         -
                    (.258)  10/01/94

   7     McHenry   56.7094  04/22/91     680,513       44,444      724,957      2,746,669    1,478,831    1,992,795      311,694
                  (12.6506) Var 1997
                  (11.7781) Var 1998

   8     Kane     325.394   06/14/91   3,496,700      262,275    3,758,975         26,265       10,000    3,775,240         -
                    (.870)  04/03/96

   9     Will       9.867   08/13/91     217,074          988      218,062          6,007         -         224,069         -

  10     Will     150.66    08/20/91   1,866,716       89,333    1,956,049          4,816         -       1,960,865         -

  11     Will     138.447   08/20/91     289,914       20,376      310,290          2,700      312,990         -            -
                 (138.447)  05/03/93

  12     Will      44.732   08/20/91     444,386       21,988      466,374          4,472         -         470,846         -

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

  14     Kendall   44.403   09/03/91     888,060       68,210      956,270         18,089         -         974,359         -

  15     Kendall  100.364   09/04/91   1,050,000       52,694    1,102,694        117,829    1,220,523         -            -
                   (5.000)  09/01/93
                  (11.000)  12/01/94
                  (84.364)  08/14/98

  16     McHenry  168.905   09/13/91   1,402,058       69,731    1,471,789         82,111         -       1,553,900         -

  17     Kendall    3.462   10/30/91     435,000       22,326      457,326          3,669         -         460,995         -

  18     McHenry  139.1697  11/07/91   1,160,301       58,190    1,218,491        272,973         -       1,491,464         -
                                     ------------ ------------ ------------ -------------- ------------ ------------ ------------
        Subtotal                     $20,641,999    1,214,121   21,856,120      4,015,410    3,166,497   22,705,033      311,694

                                                                -10-


                                     -10-


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

                                                    Notes to Financial Statements
                                                             (continued)

(4) Investment Properties (continued)

                                                                                                              Total
                   Gross                            Initial Costs                 Costs                     Remaining    Current
                   Acres    Purchase/  --------------------------------------  Capitalized     Costs of      Costs of   Year Gain
       Location: Purchased    Sales       Original  Acquisition     Total     Subsequent to    Property     Parcels at   on Sale
Parcel  County    (Sold)      Date         Costs       Costs        Costs      Acquisition       Sold        9/30/98    Recognized
------ --------- ---------- ---------- ------------ ------------ ------------ -------------- ------------ ------------ ------------
<S>     <C>      <C>         <C>         <C>          <C>          <C>           <C>          <C>            <C>          <C>
        Subtotal                      $20,641,999    1,214,121   21,856,120      4,015,410    3,166,497   22,705,033     311,694

  19       Kane   436.236   12/13/91    4,362,360      321,250    4,683,610        159,060         -       4,842,670        -

  20     Kane &
         Kendall  400.129   01/31/92    1,692,623      101,318    1,793,941        147,487         -       1,941,428        -

  21     Kendall   15.013   05/26/92      250,000       23,844      273,844          7,743         -         281,587        -

  22     Kendall  391.959   10/30/92    3,870,000      283,186    4,153,186        101,373      164,804    4,089,755        -
                  (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      4,415,849    5,364,218    2,534,946     447,508
                  (11.525)  07/16/93
                  (44.070)  Var 1995
                   (8.250)  Var 1996
                   (2.610)  Var 1997
                   (7.3984) Var 1998

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

  24     Kendall    3.908   01/21/93      645,000       56,316      701,316          2,204         -         703,520        -

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

  25     Kendall  656.687   01/28/93    1,625,000       82,536    1,707,536         22,673    1,730,209         -           -
                 (656.687)  10/31/95

  26     Kane      89.511   03/10/93    1,181,555       89,312    1,270,867         65,273         -       1,336,140        -

  27     Kendall   83.525   03/11/93      984,474       54,846    1,039,320            889         -       1,040,209        -
                                      ------------ ------------ ------------ -------------- ------------ ------------ -----------
                                      $38,810,025    2,504,276   41,314,301      8,937,961   10,608,441   39,643,821     759,202
                                      ============ ============ ============ ============== ============ ============ ===========

</TABLE>









                                                               -11-


                                     -11-


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

                         Notes to Financial Statements
                                  (continued)

                              September 30, 1998
                                  (unaudited)


(3) Investment Properties (continued)

(a) Included in the purchase of Parcel  23 was a newly constructed 2,500 square
    foot house. The house 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,  Illinois 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, 1998, 158 of
    the 243 single-family lots.

(d) Reconciliation of real estate owned:
                                                       1998          1997
                                                       ----          ----
  Balance at January 1,........................... $41,858,671    40,607,293
  Additions during period.........................     569,958     2,348,964
                                                   ------------  ------------
                                                    42,428,629    42,956,257
  Sales during period.............................   2,784,808     1,097,586
                                                   ------------  ------------
  Balance at end of period........................ $39,643,821    41,858,671
                                                   ============  ============

(e) Reconciliation of accumulated depreciation:
                                                       1998          1997
                                                       ----          ----
  Balance at January 1,........................... $    15,384        12,282
  Depreciation expense............................       2,327         3,102
  Sales during period.............................        -             -
                                                   ------------  ------------
  Balance at end of period........................ $    17,711        15,384
                                                   ============  ============


(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, 1998, the Partnership had farm leases of generally one year
in duration, for approximately  3,045  acres  of  the approximately 3,465 acres
owned.



                                     -12-


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

                         Notes to Financial Statements
                                  (continued)

                              September 30, 1998
                                  (unaudited)


(5) Mortgage Loans Receivable

As a result of the sale  of  the  remaining approximately 84 acres of Parcel 15
for a sales price of $2,750,000 on  August 14, 1998, the Partnership received a
mortgage loan receivable of $2,750,000 and  recorded a deferred gain on sale of
$1,701,090.  The deferred gain will be  recognized over the life of the related
mortgage loan receivable as principal payments are received.  The mortgage loan
receivable accrues interest at 9% per annum and has a maturity date of July 31,
2001, at which time all accrued interest, as  well as principal, is due.  As of
September 30, 1998, accrued interest totaled $32,548.






































                                     -13-


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

Certain statements in this  "Management's  Discussion and Analysis of Financial
Condition and Results of Operations" and  elsewhere in this quarterly report on
Form 10-Q constitute of "forward-looking  statements" within the meaning of the
Federal Private Securities  Litigation  Reform  Act  of  1995.   These forward-
looking statements involve  known  and  unknown  risks, uncertainties and other
factors which  may  cause  the  Partnership's  actual  results,  performance or
achievements to be materially different from any future results, performance or
achievements expressed or implied  by  these forward-looking statements.  These
factors include,  among  other  things,  federal,  state  or local regulations;
adverse changes in general economic  or local conditions; inability of borrower
to meet financial  obligations;  uninsured  losses;  and potential conflicts of
interest between the  Partnership  and  its  Affiliates,  including the General
Partner.

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. On October 24, 1991,
the Partnership terminated its Offering of Units, 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  capital  contribution  of $500. All of 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 include 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, 1998, the Partnership has had multiple sales transactions through
which it has disposed of  approximately  1,015 acres of the approximately 4,480
acres originally owned.   As  of  September  30, 1998, cumulative distributions
have totaled $6,836,753 to  the  Limited  Partners  and  $93,034 to the General
Partner.  Of the $6,836,753 distributed to the Limited Partners, $6,115,753 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, 1998,  the  Partnership  has  used  $8,937,961 of working capital
reserve for rezoning and other  activities.  Such amounts have been capitalized
and are 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, 1998,  the Partnership owns, in whole or in part,
twenty-three of its twenty-seven 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.



                                     -14-


At  September  30,  1998,  the  Partnership  had  cash,  cash  equivalents  and
investments in  marketable  securities  of  $3,192,981,  of which approximately
$264,700 is reserved for the  repurchase  of  Units through the Unit Repurchase
Program.  The remaining $2,928,281 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 has increased
its parcel sales effort in anticipation of rising land values.

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 in  planning  stage  and  sites  are  being  marketed to potential
buyers. Parcel 7, the Olde Mill  Ponds  on  Boone Creek subdivision, has all of
the total 130 single-family lots  under  contract  with a homebuilder, of which
fifty-six have already closed (see Note  3 of the Notes to Financial Statements
for further discussion of Parcel 7).    Parcel 18, zoned for multi- and single-
family use, is being marketed to  potential  homebuilders.  As of September 30,
1998, the Partnership has sold 158  of  the 243 single-family lots at the Ponds
of Mill Race Creek (Parcel  23)  in  addition  to the multi-family portion, the
Winding Waters of  Mill  Race  Creek.  The  Partnership  has fifty-three of the
remaining 85 single-family lots under contract with homebuilders (see Note 3 of
the Notes to Financial Statements for further discussion on Parcel 23).

Results of Operations

As of September 30, 1998,  the  Partnership  owned twenty-three parcels of land
consisting of  approximately  3,465  acres  and  one  office  building.  Of the
approximately 3,465 acres  owned,  3,045  acres  are  tillable, leased to local
farmers and generate sufficient  cash  flow  to cover property taxes, insurance
and  other  miscellaneous  expenses.    Income  from  the  sale  of  investment
properties and cost of investment properties  sold recorded for the nine months
ended September 30, 1998 is the  result  of  the sale of additional lots at the
Olde Mill Ponds on Boone Creek  subdivision  (Parcel 7), the sale of additional
lots at the Ponds of Mill  Race  Creek  subdivision (Parcel 23) and the sale of
the remaining approximately 84 acres of Parcel 15.  Rental income increased for
the three and nine months ended  September  30,  1998, as compared to the three
and nine months ended September 30,  1997,  due to the annual increase in lease
amounts from tenants.

Interest income decreased for  the  nine  months  ended  September 30, 1998, as
compared to the nine months  ended  September  30, 1997, due to the Partnership
distributing net sales proceeds  of  approximately  $4,000,000 in July 1997 and
using its working  capital  reserve  to  fund  pre-development  activity on the
Partnership's investment properties.   Interest  income increased for the three
months ended  September  30,  1998,  as  compared  to  the  three  months ended
September 30, 1997, due primarily as a  result of the interest income earned on
the mortgage loan receivable  the  Partnership  received  from  the sale of the
remaining acreage  of  Parcel  15.    See  Note  5  of  the  Notes to Financial
Statements for further discussion of the  terms of the mortgage loan receivable
received from this sale.

The other income recorded for the  nine months ended September 30, 1998 relates
to one of the homebuilders on Parcel  23  buying out of its lot sales contract.
The General Partner plans to replace this homebuilder with another one.


                                     -15-


Professional services to non-affiliates decreased for the three and nine months
ended September 30,  1998,  as  compared  to  the  three  and nine months ended
September 30, 1997, due primarily to a decrease in legal services.

General and administrative expenses to  Affiliates  decreased for the three and
nine months ended September 30, 1998, as  compared to the three and nine months
ended September 30, 1997,  due  to  decreases  in  postage, data processing and
investor  service  expenses.    General  and  administrative  expenses  to non-
affiliates decreased for the nine months  ended September 30, 1998, as compared
to the nine months ended September  30,  1997, due to decreases in printing and
state tax expenses.

Marketing expenses to Affiliates decreased for  the three and nine months ended
September 30, 1998, as compared  to  the  three and nine months ended September
30, 1997, due to  the  identification  of  such  costs  which are specific to a
particular parcel, and accordingly, have  been  capitalized and are included in
investments in land.   Marketing  expenses  to non-affiliates increased for the
three and nine months ended September  30,  1998,  as compared to the three and
nine months ended September 30,  1997,  due  to  an increase in advertising and
travel  expenses  relating  to  marketing  the  land  portfolio  to prospective
purchasers.

Land operating expenses  to  non-affiliates  increased  for  the three and nine
months ended September 30, 1998, as compared to the three and nine months ended
September 30, 1997, due to  an  increase  in  real estate taxes and maintenance
expenses of the Partnership's land investments.




Year 2000 Issues

GENERAL

Many computer operating systems  and  software  applications were designed such
that the year 1999 is the  maximum  date  that can be processed accurately.  In
conducting business, the Partnership relies  on computers and operating systems
provided by equipment manufacturers, and also on application software developed
internally and,  to  a  limited  extent,  by  outside  software  vendors.   The
Partnership has assessed its  vulnerability  to the so-called "Year-2000 Issue"
with respect to its equipment and computer systems.

STATE OF READINESS

The  Partnership  has  identified  the  following  two  areas  for  "Year-2000"
compliance efforts:

Business  Computer  Systems:  The  majority  of  the  Partnership's information
technology systems  were  developed  internally  and  include accounting, lease
management, investment portfolio  tracking,  and  tax  return preparation.  The
Partnership has rights to the  source  code  for these applications and employs
programmers who are  knowledgeable  regarding  these  systems.   The process of
testing these internal  systems  to  determine  year  2000 compliance is nearly
complete.  The Partnership does  not  anticipate any material costs relating to
its business computer systems regarding year 2000 compliance since the 



                                     -16-


Partnership's  critical  hardware  and  software  systems  use  four  digits to
represent the applicable year.  The Partnership does use various computers, so-
called "PC's", that may run software that  may not use four digits to represent
the applicable year.  The  Partnership  is  in  the  process  of testing the PC
hardware and software to determine year  2000  compliance, but it must be noted
that such PC's  are  incidental  to  the  Partnership's  critical systems.  The
Partnership is considering independent testing of its critical systems.

Tenants and Suppliers: The Partnership is  in the process of surveying tenants,
suppliers and other parties with whom the Partnership does a significant amount
of business to identify the Partnership's  potential exposure in the event such
parties are not  year  2000  compliant  in  a  timely  manner.  Since this area
involves some parties over which the Partnership has no control, such as public
utility companies, it is difficult, at best, to judge the status of the outside
companies' year 2000 compliance.  The  Partnership  is working closely with all
suppliers of goods and services  in  an  effort  to  minimize the impact of the
failure of any supplier to become year 2000 compliant by December 31, 1999. The
Partnership's investigations and assessments  of  possible year 2000 issues are
in a preliminary stage,  and  currently  the  Partnership  is  not aware of any
material impact on its business, operations  or financial condition due to year
2000 non-compliance by any of the Partnership's tenants or suppliers. 

YEAR 2000 COSTS

The Partnership's General Partner  and  its  Affiliates  estimate that costs to
achieve  year  2000  compliance   will   not   exceed  $50,000.  However,  only
approximately 1% of these costs will  be  directly allocated to and paid by the
Partnership. The balance of the  year 2000 compliance costs, approximately 99%,
will be paid by  the  General  Partner  and  its  Affiliates.   Total year 2000
compliance  costs  incurred  through  September   30,  1998  are  estimated  at
approximately $5,000.

YEAR 2000 RISKS

The most reasonable likely worst case scenario for the Partnership with respect
to the year 2000 non-compliance of  its  business computer systems would be the
inability to access information  which  could  result  in  the failure to issue
financial reports.  The  most  reasonable  likely  worst  case scenario for the
Partnership with respect to  the  year  2000  non-compliance  of its tenants is
failure to receive rental income  which  could  result in the Partnership being
unable to meet cash requirements for monthly expenses.

CONTINGENCY PLAN

The Partnership is in the process  of formulating a contingency plan which will
be developed by July of 1999.

                          PART II - Other Information

Items 1 through 6(b) are  omitted  because  of  the absence of conditions under
which they are required.

Item 7.  Exhibits and Reports on Form 8-K

     (a) Exhibits:

         (27) Financial Data Schedule

     (b) Reports on Form 8-K:

         None


                                     -17-


                                  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 12, 1998


                                  /S/ PATRICIA A. CHALLENGER

                            By:   Patricia A. Challenger
                                  Senior Vice President
                            Date: November 12, 1998


                                  /S/ KELLY TUCEK

                            By:   Kelly Tucek
                                  Principal Financial Officer and
                                  Principal Accounting Officer
                            Date: November 12, 1998






















                                     -18-