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 June 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

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



                                    Assets
                                    ------

                                                       1998          1997
Current assets:                                        ----          ----
  Cash and cash equivalents (Note 1).............. $ 1,932,264       961,428
  Short-term investments (Note 1).................     431,682       431,682
  Accounts and accrued interest receivable........      35,261        25,065
  Other current assets............................       5,000         2,380
                                                   ------------  ------------
Total current assets..............................   2,404,207     1,420,555
                                                   ------------  ------------

Investment properties (including acquisition
  fees paid to Affiliates of $1,984,053 and
  $2,003,096 at June 30, 1998 and December 31,
  1997, respectively) (Notes 1 and 3):
  Land and improvements...........................  41,197,593    41,765,589
  Buildings.......................................      93,082        93,082
                                                   ------------  ------------
                                                    41,290,675    41,858,671
  Less accumulated depreciation...................      16,936        15,384
Total investment properties, net of accumulated    ------------  ------------
  depreciation....................................  41,273,739    41,843,287
                                                   ------------  ------------
Total assets...................................... $43,677,946    43,263,842
                                                   ============  ============


















                See accompanying notes to financial statements.


                                      -2-



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

                                Balance Sheets
                                  (continued)

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



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

                                                       1998          1997
                                                       ----          ----
Current liabilities:
  Accounts payable................................ $    22,748        21,221
  Accrued real estate taxes.......................     105,584       100,993
  Due to Affiliates (Note 2)......................         359        12,450
  Unearned income.................................      38,029       109,669
                                                   ------------  ------------
Total current liabilities.........................     166,720       244,333
                                                   ------------  ------------
Partners' capital (Notes 1 and 2):
  General Partner:
   Capital contribution...........................         500           500
   Cumulative net income..........................     450,640       449,454
   Cumulative cash distributions..................     (93,034)      (93,034)
                                                   ------------  ------------
                                                       358,106       356,920
  Limited Partners:                                ------------  ------------
   Units of $1,000. Authorized 60,000 Units,
    50,159.52 and 50,164.52 Units outstanding
    at June 30, 1998 and December 31, 1997,
    respectively (net of offering costs of
    $7,532,439, of which $2,535,445 was paid
    to Affiliates)................................   42,632,619   42,637,010
   Cumulative net income..........................    7,357,254    6,862,332
   Cumulative cash distributions..................  (6,836,753)   (6,836,753)
                                                   ------------  ------------
                                                    43,153,120    42,662,589
                                                   ------------  ------------
Total Partners' capital...........................  43,511,226    43,019,509
                                                   ------------  ------------
Total liabilities and Partners' capital........... $43,677,946    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 six months ended June 30, 1998 and 1997
                                  (unaudited)


                                        Three months           Six months
                                           ended                 ended
                                          June 30,              June 30,
                                          --------              --------
                                       1998       1997       1998       1997
Income:                                ----       ----       ----       ----
  Sale of investment properties
    (Notes 1 and 3)................ $  934,618    968,730  1,302,739  1,046,617
  Rental income (Note 4)...........     92,648     91,803    184,480    183,710
  Interest income..................     30,355     64,895     52,866    150,507
  Other income.....................       -          -       160,057       -
                                    ---------- ---------- ---------- ----------
                                     1,057,621  1,125,428  1,700,142  1,380,834
                                    ---------- ---------- ---------- ----------
Expenses:
  Cost of investment properties
    sold...........................    672,817    559,564    925,220    593,901
  Professional services to
    Affiliates.....................      6,385      8,316     16,185     18,594
  Professional services to
    non-affiliates.................        286     20,192     31,959     52,219
  General and administrative
    expenses to Affiliates.........      1,303      6,086      9,748     16,227
  General and administrative
    expenses to non-affiliates.....     10,866      7,337     19,086     21,089
  Marketing expenses to Affiliates.       (195)    26,323      8,885     67,336
  Marketing expenses to
    non-affiliates.................     30,809     28,493     61,139     52,571
  Land operating expenses to
    Affiliates.....................     22,626     22,853     45,350     45,754
  Land operating expenses to
    non-affiliates.................     41,706     28,085     84,910     71,015
  Depreciation.....................        776        776      1,552      1,551
                                    ---------- ---------- ---------- ----------
                                       787,379    708,025  1,204,034    940,257
                                    ---------- ---------- ---------- ----------
Net income......................... $  270,242    417,403    496,108    440,577
                                    ========== ========== ========== ==========








                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 six months ended June 30, 1998 and 1997
                                  (unaudited)


                                        Three months           Six months
                                           ended                 ended
                                          June 30,              June 30,

                                       1998       1997       1998       1997

Net income (loss) allocated to:
  General Partner.................. $       85         83      1,186       (121)
  Limited Partners.................    270,157    417,320    494,922    440,698
                                    ---------- ---------- ---------- ----------
Net income......................... $  270,242    417,403    496,108    440,577
                                    ========== ========== ========== ==========

Net income (loss) allocated to the
  one General Partner Unit......... $       85         83      1,186       (121)
                                    ========== ========== ========== ==========

Net income per Unit, basic and
  diluted, allocated to Limited
  Partners per weighted average
  Limited Partnership Units
  (50,161.17 and 50,177.82 for the
  three months ended June 30, 1998
  and 1997, and 50,162.84 and
  50,181.15 for the six months
  ended June 30, 1998 and 1997,
  respectively).................... $     5.39       8.31       9.87       8.78
                                    ========== ========== ========== ==========

















                 See accompanying notes to financial statements.


                                      -5-



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

                            Statements of Cash Flows

                 For the six months ended June 30, 1998 and 1997
                                   (unaudited)


                                                       1998          1997
Cash flows from operating activities:                  ----          ----
  Net income...................................... $   496,108       440,577
  Adjustments to reconcile net income to net cash
      provided by (used in) operating activities:
    Depreciation..................................       1,552         1,551
    Gain on sale of investment properties.........    (377,519)     (452,716)
    Changes in assets and liabilities:
      Accounts and accrued interest receivable....     (10,196)      (64,930)
      Other current assets........................      (2,620)       (2,675)
      Accounts payable............................       1,527           564
      Accrued real estate taxes...................       4,591        (5,054)
      Due to Affiliates...........................     (12,091)       18,904
      Unearned income.............................     (71,640)       20,946
Net cash provided by (used in) operating           ------------  ------------
  activities......................................      29,712       (42,833)
                                                   ------------  ------------
Cash flows from investing activities:
  Additions to investment properties..............    (357,224)   (1,238,582)
  Sale (purchase) of short-term investments, net..        -        1,221,108
  Proceeds from sale of investment properties.....   1,302,739     1,046,617
                                                   ------------  ------------
Net cash provided by investing activities.........     945,515     1,029,143
                                                   ------------  ------------
Cash flows from financing activities:
  Cash distributions..............................        -             (120)
  Repurchase of Limited Partnership Units.........      (4,391)       (9,579)
                                                   ------------  ------------
Net cash used in financing activities.............      (4,391)       (9,699)
                                                   ------------  ------------

Net increase in cash and cash equivalents.........     970,836       976,611
Cash and cash equivalents at beginning of
  period..........................................     961,428     3,904,046
                                                   ------------  ------------
Cash and cash equivalents at end of period........ $ 1,932,264     4,880,657
                                                   ============  ============










                See accompanying notes to financial statements.


                                      -6-



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

                         Notes to Financial Statements

                                 June 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  June  30, 1998, the Partnership has
repurchased a total of 316.65 Units  for $311,112 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)

                                 June 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
June 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)

                                 June 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 $359 and $3,977 was unpaid  as  of  June  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 $45,350 and
$45,754 have been incurred and paid for  the six months ended June 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 $8,885 and $67,336
have been incurred and are included in marketing expenses to Affiliates for the
six months ended June 30, 1998  and  1997, respectively, of which $0 and $8,473
was unpaid as of June 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, all
of which have been paid as of June 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       Cumulative   Remaining     Current
                   Acres    Purchase/ --------------------------------------  Capitalized     Costs of     Costs of    Year Gain
Parcel Location: Purchased   Sales      Original   Acquisition     Total     Subsequent to    Property    Parcels at    On Sale
  #      County   /(Sold)     Date        Costs       Costs        Costs      Acquisition      Sold        6/30/98     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        487,996         -       2,716,361         -

   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          8,799         -       1,717,456         -

   4   Kendall    299.025   06/28/91    1,442,059       77,804    1,519,863          2,411         -       1,522,274         -

   5   Kane       189.0468  02/28/91    1,954,629       94,569    2,049,198        167,250         -       2,216,448         -

   6   Lake        57.3345  04/16/91      904,337       71,199      975,536         18,296        4,457      989,375         -
                    (.258)  10/01/94

   7   McHenry     56.7094  04/22/91      680,513       44,444      724,957      2,618,227    1,226,487    2,116,697      206,275
                  (12.6506) Var 1997
                   (7.8521) Var 1998

   8   Kane       325.394   06/14/91    3,496,700      262,275    3,758,975         26,249       10,000    3,775,224         -
                    (.870)  04/03/96

   9   Will         9.867   08/13/91      217,074          988      218,062          5,846         -         223,908         -

  10   Will       150.66    08/20/91    1,866,716       89,333    1,956,049          4,664         -       1,960,713         -

  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          4,311         -         470,685         -

  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         16,654         -         972,924         -

  15   Kendall    100.364   09/04/91    1,050,000       52,694    1,102,694        116,955      177,298    1,042,351         -
                   (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         82,062         -       1,553,851         -

  17   Kendall      3.462   10/30/91      435,000       22,326      457,326          3,627         -         460,953         -

  18   McHenry    139.1697  11/07/91    1,160,301       58,190    1,218,491        272,825         -       1,491,316          -
                                      ------------ ------------ ------------ -------------- ------------ ------------ ------------
       Subtotal                       $20,641,999    1,214,121   21,856,120      3,847,036    1,870,928   23,832,228      206,275

                                                                -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       Cumulative   Remaining     Current
                   Acres    Purchase/ --------------------------------------  Capitalized     Costs of     Costs of    Year Gain
Parcel Location: Purchased   Sales      Original   Acquisition     Total     Subsequent to    Property    Parcels at    On Sale
  #      County   /(Sold)     Date        Costs       Costs        Costs      Acquisition      Sold        6/30/98     Recognized
------ --------- --------- ---------- ------------ ------------ ------------ -------------- ------------ ------------ ------------
 <S>   <C>       <C>       <C>         <C>            <C>        <C>            <C>            <C>         <C>            <C>
        Subtotal                      $20,641,999    1,214,121   21,856,120      3,847,036    1,870,928   23,832,228     206,275

  19     Kane     436.236   12/13/91    4,362,360      321,250    4,683,610        148,485         -       4,832,095        -

  20     Kane &
         Kendall  400.129   01/31/92    1,692,623      101,318    1,793,941        122,529         -       1,916,470        -

  21     Kendall   15.013   05/26/92      250,000       23,844      273,844          7,652         -         281,496        -

  22     Kendall  391.959   10/30/92    3,870,000      283,186    4,153,186         96,983      164,804    4,085,365        -
                  (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      4,413,583    4,800,199    3,096,699     171,244
                  (11.525)  07/16/93
                  (44.070)  Var 1995
                   (8.250)  Var 1996
                   (2.610)  Var 1997
                   (3.264)  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          2,171         -         703,487        -

  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         63,275         -       1,334,142        -

  27     Kendall   83.525   03/11/93      984,474       54,846    1,039,320            840         -       1,040,160        -
                                      ------------ ------------ ------------ -------------- ------------ ------------ -----------
                                      $38,810,025    2,504,276   41,314,301      8,725,227    8,748,853   41,290,675     377,519
                                      ============ ============ ============ ============== ============ ============ ===========


</TABLE>








                                                               -11-


                                     -11-



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

                         Notes to Financial Statements
                                  (continued)

                                 June 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 June 30, 1998, 139 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.........................     357,224     2,348,964
                                                   ------------  ------------
                                                    42,215,895    42,956,257
  Sales during period.............................     925,220     1,097,586
                                                   ------------  ------------
  Balance at end of period........................ $41,290,675    41,858,671
                                                   ============  ============

(e) Reconciliation of accumulated depreciation:
                                                       1998          1997
                                                       ----          ----
  Balance at January 1,........................... $    15,384        12,282
  Depreciation expense............................       1,552         3,102
  Sales during period.............................        -             -
                                                   ------------  ------------
  Balance at end of period........................ $    16,936        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 June 30, 1998, the Partnership  had  farm leases of generally one year in
duration, for approximately 3,045 acres of the approximately 3,557 acres owned.



                                     -12-



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
June 30, 1998,  the  Partnership  has  had  multiple sales transactions through
which it has disposed  of  approximately  923  acres of the approximately 4,480
acres originally owned.   As  of  June  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 June 30, 1998,
the Partnership has used $8,725,227 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 June  30,  1998,  the  Partnership  owns,  in whole or in part,
twenty-four 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.


                                     -13-



At June 30, 1998, the Partnership had cash, cash equivalents and investments in
marketable  securities  of  $2,363,946,  of  which  approximately  $296,300  is
reserved for the repurchase of Units  through the Unit Repurchase Program.  The
remaining $2,067,646 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
forty-seven  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. Parcel 15
has been zoned with development  and  sales  marketing underway. As of June 30,
1998, the Partnership has sold 139  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 114 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  June  30,  1998,  the  Partnership  owned  twenty-four  parcels  of land
consisting of  approximately  3,557  acres  and  one  office  building.  Of the
approximately 3,557 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 six months ended June  30, 1998 is the result of the sale
of additional lots at the Olde Mill Ponds on Boone Creek subdivision (Parcel 7)
and the sale of additional  lots  at  the  Ponds of Mill Race Creek subdivision
(Parcel 23).

Interest income decreased for the three and  six months ended June 30, 1998, as
compared to  the  three  and  six  months  ended  June  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.

The other income recorded for the six months ended June 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.








                                     -14-



Professional services to  Affiliates  decreased  for  the  three and six months
ended June 30, 1998, as compared  to  the  three  and six months ended June 30,
1997, due  to  a  decrease  in  legal  services  required  by  the Partnership.
Professional services to non-affiliates decreased  for the three and six months
ended June 30, 1998, as compared  to  the  three  and six months ended June 30,
1997, due primarily to a decrease in legal services.

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

Marketing expenses to Affiliates decreased  for  the three and six months ended
June 30, 1998, as compared to the three and six months ended June 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 six months
ended June 30, 1998, as compared  to  the  three  and six months ended June 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 six
months ended June 30, 1998, as compared  to the three and six months ended June
30, 1997, due to increases in real estate taxes.


Year 2000 Compliance

The  Partnership  has  reviewed  its  current  computer  systems  and  does not
anticipate any future problems relating to the year 2000.



                          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: August 11, 1998


                                  /S/ PATRICIA A. CHALLENGER

                            By:   Patricia A. Challenger
                                  Senior Vice President
                            Date: August 11, 1998


                                  /S/ KELLY TUCEK

                            By:   Kelly Tucek
                                  Principal Financial Officer and
                                  Principal Accounting Officer
                            Date: August 11, 1998





















                                     -16-