SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C.  20549
                                
                           FORM 10-QSB
                                
           Quarterly Report Under Section 13 or 15(d)
             of The Securities Exchange Act of 1934
                                
           For the Quarter Ended:  September 30, 1996
                                
                Commission file number:  0-17467
                                
                                
            AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
(Exact Name of Small Business Issuer as Specified in its Charter)


      State of Minnesota                   41-1603719
(State or other Jurisdiction of         (I.R.S. Employer
Incorporation or Organization)        Identification No.)


  1300 Minnesota World Trade Center, St. Paul, Minnesota 55101
            (Address of Principal Executive Offices)
                                
                         (612) 227-7333
                   (Issuer's telephone number)
                                
                                
                         Not Applicable
 (Former name, former address and former fiscal year, if changed
                       since last report)
                                
Check  whether  the issuer (1) 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
                                
         Transitional Small Business Disclosure Format:
                                
                         Yes           No   [X]
                                
                                
                                
                                
          AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
                                
                                
                              INDEX
                                
                                
                                                     

PART I. Financial Information

 Item 1. Balance Sheet as of September 30, 1996 and December 31, 1995

         Statements for the Periods ended September 30, 1996 and 1995:

            Income                                     

            Cash Flows                                 

            Changes in Partners' Capital               

          Notes to Financial Statements                

 Item 2. Management's Discussion and Analysis     

PART II. Other Information

 Item 1. Legal Proceedings                          

 Item 2. Changes in Securities                      

 Item 3. Defaults Upon Senior Securities            

 Item 4. Submission of Matters to a Vote of Security  Holders

 Item 5.  Other Information                          

 Item 6.  Exhibits and Reports on Form 8-K          

<PAGE>
          AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
                                
                          BALANCE SHEET
                                
            SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
                                
                           (Unaudited)
                                
                                
                             ASSETS
                                                        1996         1995

CURRENT ASSETS:
   Cash and Cash Equivalents                        $  7,961,286  $  6,467,946
   Receivables                                            34,571        79,092
                                                      -----------   -----------
        Total Current Assets                           7,995,857     6,547,038
                                                      -----------   -----------
INVESTMENTS IN REAL ESTATE:
   Land                                                3,718,282     4,852,325
   Buildings and Equipment                             8,826,334    10,154,639
   Accumulated Depreciation                           (2,578,751)   (2,796,130)
                                                      -----------   -----------
                                                       9,965,865    12,210,834
   Land Held for Resale                                  261,644             0
                                                      -----------   -----------
         Net Investments in  Real Estate              10,227,509    12,210,834
                                                      -----------   -----------
               Total Assets                          $18,223,366   $18,757,872
                                                      ===========   ===========


                       LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
   Payable to AEI Fund Management, Inc.              $    44,906   $    53,187
   Distributions Payable                                 433,536       715,773
   Security Deposit                                       37,307        37,307
   Unearned Rent                                          69,111             0
                                                      -----------   -----------
        Total Current Liabilities                        584,860       806,267
                                                      -----------   -----------
PARTNERS' CAPITAL (DEFICIT):
   General Partners                                      (25,027)      (21,896)
   Limited Partners, $1,000 Unit value;
   30,000 Units authorized; 23,389 Units
   issued; 23,107 Units outstanding                   17,663,533    17,973,501
                                                      -----------   -----------
          Total Partners' Capital                     17,638,506    17,951,605
                                                      -----------   -----------
            Total Liabilities and Partners' Capital  $18,223,366   $18,757,872
                                                      ===========   ===========

 The accompanying Notes to Financial Statements are an integral
                     part of this statement.

</PAGE>
<PAGE>
          AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
                                
                       STATEMENT OF INCOME
                                
               FOR THE PERIODS ENDED SEPTEMBER 30
                                
                           (Unaudited)
                                
                           Three Months Ended      Nine Months Ended
                           9/30/96    9/30/95      9/30/96     9/30/95

INCOME:
 Rent                    $ 348,769  $   552,088   $ 1,108,861  $ 1,706,114
 Investment Income          82,269       16,798       245,577       18,490
 Other Income                    0            0             0       36,592
                          ---------  -----------   -----------  -----------
        Total Income       431,038      568,886     1,354,438    1,761,196
                          ---------  -----------   -----------  -----------

EXPENSES:
 Partnership Administration -
  Affiliates                75,136       77,125       221,490      227,125
 Partnership Administration
  and Property Management - 
  Unrelated Parties         38,160       30,394       139,416       75,624
 Interest                        0        5,973             0       22,942
 Depreciation              103,378      136,010       311,103      418,570
                          ---------  -----------   -----------  -----------
        Total Expenses     216,674      249,502       672,009      744,261
                          ---------  -----------   -----------  -----------

OPERATING INCOME           214,364      319,384       682,429    1,016,935

GAIN ON SALE OF REAL
  ESTATE                   347,224      978,599       425,514      978,599

MINORITY INTEREST IN
  OPERATING INCOME               0       (5,814)            0      (17,443)
                          ---------  -----------   -----------  -----------

NET INCOME               $ 561,588  $ 1,292,169   $ 1,107,943  $ 1,978,091
                          =========  ===========   ===========  ===========

NET INCOME ALLOCATED:
 General Partners        $   5,615  $    12,922   $    11,079  $    19,781
 Limited Partners          555,973    1,279,247     1,096,864    1,958,310
                          ---------  -----------   -----------  -----------
                         $ 561,588  $ 1,292,169   $ 1,107,943  $ 1,978,091
                          =========  ===========   ===========  ===========
NET INCOME PER
 LIMITED PARTNERSHIP UNIT
 (23,107 and 23,162 weighted average
 Units outstanding in 1996 and 1995,
 respectively)           $   24.06  $    55.23    $    47.47   $    84.55
                          =========  ===========   ===========  ===========
                                
 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
</PAGE>
<PAGE>
          AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
                                
                     STATEMENT OF CASH FLOWS
                                
               FOR THE PERIODS ENDED SEPTEMBER 30
                                
                           (Unaudited)
                                
                                                        1996         1995

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net  Income                                      $  1,107,943  $  1,978,091

   Adjustments to Reconcile Net Income to Net Cash
   Provided by Operating Activities:
     Depreciation                                        311,103       418,570
     Gain on Sale of Real Estate                        (425,514)     (978,599)
     (Increase) Decrease in Receivables                   44,521          (707)
     Decrease in Payable to
        AEI Fund Management, Inc.                         (8,281)      (38,056)
     Decrease in Contract Payable                              0       (15,702)
     Increase in Unearned Rent                            69,111        60,859
     Minority Interest                                         0        (3,405)
                                                      -----------   -----------
        Total Adjustments                                 (9,060)     (557,040)
                                                      -----------   -----------
        Net Cash Provided By
        Operating Activities                           1,098,883     1,421,051
                                                      -----------   -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Proceeds from Sale of Real Estate                   2,097,736     2,472,238
                                                      -----------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Decrease in Distributions Payable                    (282,237)     (108,160)
   Distributions to Partners                          (1,421,042)   (1,188,033)
   Decrease in Long-Term Debt - Net                            0       (24,165)
                                                      -----------   -----------
        Net Cash Used For
        Financing Activities                          (1,703,279)   (1,320,358)
                                                      -----------   -----------
NET INCREASE IN CASH
   AND CASH EQUIVALENTS                                1,493,340     2,572,931

CASH AND CASH EQUIVALENTS, beginning of period         6,467,946       106,795
                                                      -----------   -----------

CASH AND CASH EQUIVALENTS, end of period             $ 7,961,286   $ 2,679,726
                                                      ===========   ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Interest Paid During the Period                    $         0   $    19,292
                                                      ===========   ===========
                                
 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
</PAGE>

<PAGE>                                
          AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
                                
            STATEMENT OF CHANGES IN PARTNERS' CAPITAL
                                
               FOR THE PERIODS ENDED SEPTEMBER 30
                                
                           (Unaudited)



                                                                    Limited
                                                                  Partnership
                             General      Limited                    Units
                             Partners     Partners      Total     Outstanding


BALANCE, December 31, 1994  $ (39,245)  $16,255,941  $16,216,696    23,161.79

  Distributions               (11,880)   (1,176,153)  (1,188,033)

  Net Income                   19,781     1,958,310    1,978,091
                             ---------   -----------  -----------  ----------
BALANCE, September 30, 1995 $ (31,344)  $17,038,098  $17,006,754    23,161.79
                             =========   ===========  ===========  ==========


BALANCE, December 31, 1995  $ (21,896)  $17,973,501  $17,951,605    23,106.79

  Distributions               (14,210)   (1,406,832)  (1,421,042)

  Net Income                   11,079     1,096,864    1,107,943
                             ---------   -----------  -----------  ----------
BALANCE, September 30, 1996 $ (25,027)  $17,663,533  $17,638,506    23,106.79
                             =========   ===========  ===========  ==========

 The accompanying Notes to Financial Statements are an integral
                     part of this statement.

</PAGE>

                                
          AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                                
                       SEPTEMBER 30, 1996
                                
                           (Unaudited)
                                

(1)  The  condensed  statements included herein have been  prepared
     by  the Partnership, without audit, pursuant to the rules  and
     regulations  of  the Securities and Exchange  Commission,  and
     reflect   all  adjustments  which  are,  in  the  opinion   of
     management,  necessary to a fair statement of the  results  of
     operations for the interim period, on a basis consistent  with
     the  annual audited statements.  The adjustments made to these
     condensed   statements  consist  only  of   normal   recurring
     adjustments.   Certain information, accounting  policies,  and
     footnote    disclosures   normally   included   in   financial
     statements  prepared  in  accordance with  generally  accepted
     accounting principles have been condensed or omitted  pursuant
     to  such  rules  and  regulations,  although  the  Partnership
     believes  that  the  disclosures  are  adequate  to  make  the
     information  presented not misleading.  It is  suggested  that
     these  condensed financial statements be read  in  conjunction
     with  the  financial statements and the summary of significant
     accounting  policies  and  notes  thereto  included   in   the
     Partnership's latest annual report on Form 10-KSB.
  
(2)  Organization -

     AEI  Real Estate Fund XVII Limited Partnership (Partnership)
     was  formed  to  acquire and lease commercial properties  to
     operating tenants.  The Partnership's operations are managed
     by  AEI  Fund  Management  XVII, Inc.  (AFM),  the  Managing
     General Partner of the Partnership.  Robert P. Johnson,  the
     President  and  sole  shareholder  of  AFM,  serves  as  the
     Individual General Partner of the Partnership.  An affiliate
     of   AFM,   AEI   Fund   Management,  Inc.,   performs   the
     administrative and operating functions for the Partnership.
     
     The   terms   of  the  Partnership  offering  call   for   a
     subscription  price of $1,000 per Limited Partnership  Unit,
     payable   on  acceptance  of  the  offer.   The  Partnership
     commenced  operations  on February  10,  1988  when  minimum
     subscriptions    of   2,000   Limited   Partnership    Units
     ($2,000,000)  were  accepted.   The  Partnership's  offering
     terminated  on  November 1, 1988 when the one-year  offering
     period expired.  The Partnership received subscriptions  for
     23,388.7 Limited Partnership Units ($23,388,700).
     
     Under  the  terms of the Limited Partnership Agreement,  the
     Limited  Partners and General Partners contributed funds  of
     $23,388,700 and $1,000, respectively.  During the  operation
     of the Partnership, any Net Cash Flow, as defined, which the
     General Partners determine to distribute will be distributed
     90% to the Limited Partners and 10% to the General Partners;
     provided,  however, that such distributions to  the  General
     Partners will be subordinated to the Limited Partners  first
     receiving an annual, noncumulative distribution of Net  Cash
     Flow equal to 10% of their Adjusted Capital Contribution, as
     defined,  and, provided further, that in no event  will  the
     General Partners receive less than 1% of such Net Cash  Flow
     per  annum.  Distributions to Limited Partners will be  made
     pro rata by Units.
                                
          AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)
                                
(2)  Organization - (Continued)

     Any  Net  Proceeds  of Sale, as defined, from  the  sale  or
     financing of the Partnership's properties which the  General
     Partners determine to distribute will, after provisions  for
     debts  and  reserves, be paid in the following  manner:  (i)
     first,  99%  to the Limited Partners and 1% to  the  General
     Partners until the Limited Partners receive an amount  equal
     to:  (a)  their Adjusted Capital Contribution  plus  (b)  an
     amount  equal  to 6% of their Adjusted Capital  Contribution
     per  annum, cumulative but not compounded, to the extent not
     previously distributed from Net Cash Flow; (ii) next, 99% to
     the  Limited  Partners and 1% to the General Partners  until
     the Limited Partners receive an amount equal to 14% of their
     Adjusted Capital Contribution per annum, cumulative but  not
     compounded, to the extent not previously distributed;  (iii)
     next, to the General Partners until cumulative distributions
     to the General Partners under Items (ii) and (iii) equal 15%
     of cumulative distributions to all Partners under Items (ii)
     and (iii).  Any remaining balance will be distributed 85% to
     the  Limited  Partners  and  15% to  the  General  Partners.
     Distributions to the Limited Partners will be made pro  rata
     by Units.
     
     For  tax  purposes,  profits  from  operations,  other  than
     profits  attributable  to  the  sale,  exchange,  financing,
     refinancing   or  other  disposition  of  the  Partnership's
     property,  will  be  allocated first in the  same  ratio  in
     which,  and  to the extent, Net Cash Flow is distributed  to
     the Partners for such year.  Any additional profits will  be
     allocated 90% to the Limited Partners and 10% to the General
     Partners.   In the event no Net Cash Flow is distributed  to
     the  Limited  Partners,  90% of  each  item  of  Partnership
     income,  gain  or credit for each respective year  shall  be
     allocated to the Limited Partners, and 10% of each such item
     shall be allocated to the General Partners.  Net losses from
     operations will be allocated 98% to the Limited Partners and
     2% to the General Partners.
     
     For  tax purposes, profits arising from the sale, financing,
     or  other disposition of the Partnership's property will  be
     allocated  in  accordance with the Partnership Agreement  as
     follows:  (i) first, to those Partners with deficit balances
     in  their capital accounts in an amount equal to the sum  of
     such  deficit  balances; (ii) second,  99%  to  the  Limited
     Partners  and 1% to the General Partners until the aggregate
     balance in the Limited Partners' capital accounts equals the
     sum  of the Limited Partners' Adjusted Capital Contributions
     plus  an  amount  equal  to 14% of  their  Adjusted  Capital
     Contributions  per annum, cumulative but not compounded,  to
     the  extent  not previously allocated; (iii) third,  to  the
     General Partners until cumulative allocations to the General
     Partners equal 15% of cumulative allocations.  Any remaining
     balance  will  be allocated 85% to the Limited Partners  and
     15%  to the General Partners.  Losses will be allocated  98%
     to the Limited Partners and 2% to the General Partners.
     
     The  General Partners are not required to currently  fund  a
     deficit capital balance. Upon liquidation of the Partnership
     or  withdrawal  by  a General Partner, the General  Partners
     will  contribute to the Partnership an amount equal  to  the
     lesser of the deficit balances in their capital accounts  or
     1%  of total Limited Partners' and General Partners' capital
     contributions.
     
                                
          AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)
                                
(3)  Investments in Real Estate -

     In  1995,  the  Partnership elected early  adoption  of  the
     Statement  of  Financial  Accounting  Standards   No.   121,
     "Accounting for Impairment of Long-Lived Assets and for Long-
     Lived Assets to be Disposed Of."  This standard requires the
     Partnership to compare the carrying amount of its properties
     to  the estimated future cash flows expected to result  from
     the  property and its eventual disposition.  If the  sum  of
     the  expected  future cash flows is less than  the  carrying
     amount   of   the  property,  the  Statement  requires   the
     Partnership to recognize an impairment loss by the amount by
     which  the carrying amount of the property exceeds the  fair
     value  of the property.  Adoption of this Statement  is  not
     expected  to  have  a material effect on  the  Partnership's
     financial statements.
     
     On  April 22, 1993, the Partnership sold a 13.4893% interest
     in  the Applebee's restaurant in Virginia Beach, Virginia to
     an   unrelated  third  party.   The  Partnership  owned  the
     Virginia  Beach  property  as  tenants-in-common  with   the
     unrelated  third party.  The management of the property  was
     governed  by  a co-tenancy agreement between the Partnership
     and the unrelated third party, which granted the Partnership
     the  authority  to control the management of  the  property.
     The  Partnership accounted for its interest under  the  full
     consolidation  method  whereby the unrelated  third  party's
     interest  in  the property is reflected in the Partnership's
     financial statements as a minority interest.
     
     In  September, 1995, the lessee exercised an option  in  the
     Lease  Agreement to purchase the property.  On  November  8,
     1995,  the sale closed with the parties receiving  net  sale
     proceeds  of  $1,741,224, which resulted in a  net  gain  of
     $679,964.   At  the  time  of sale,  the  cost  and  related
     accumulated   depreciation  was  $1,279,192  and   $217,932,
     respectively.   The  Partnership's share  of  the  net  sale
     proceeds   and   net  gain  was  $1,496,613  and   $596,181,
     respectively.
     
     In  March  1995, the lessee of the Applebee's restaurant  in
     Columbia,  South Carolina, exercised an option in the  Lease
     Agreement  to purchase the property.  On July 28, 1995,  the
     sale closed with the Partnership receiving net sale proceeds
     of  $715,545  which resulted in a net gain of $307,167.   At
     the   time   of  sale,  the  cost  and  related  accumulated
     depreciation was $534,974 and $126,596, respectively.
     
     In  July  1995,  the lessee of the Applebee's restaurant  in
     Hampton,   Virginia,  exercised  an  option  in  the   Lease
     Agreement to purchase the property.  On August 31, 1995, the
     sale closed with the Partnership receiving net sale proceeds
     of  $1,747,127 which resulted in a net gain of $661,866.  At
     the   time   of  sale,  the  cost  and  related  accumulated
     depreciation was $1,287,072 and $201,811, respectively.
     
     On  October 25, 1995, the Partnership sold two of the  Jiffy
     Lube  Auto  Care  Centers  to the lessee.   The  Partnership
     recognized net sale proceeds of $322,442, which resulted  in
     a  net gain of $78,244 for the Jiffy Lube in Garland, Texas.
     At  the  time  of  sale,  the cost and  related  accumulated
     depreciation  was  $303,108 and $58,910, respectively.   The
     Partnership recognized net sale proceeds of $483,653,  which
     resulted  in  a net gain of $112,985 for one  of  the  Jiffy
     Lube's in Dallas, Texas.  At the time of sale, the cost  and
     related  accumulated depreciation was $454,300 and  $83,632,
     respectively.
                                
          AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)
                                
(3)  Investments in Real Estate - (Continued)
     
     In  September, 1995, the lessee of the Applebee's restaurant
     in  Richmond,  Virginia exercised an  option  in  the  Lease
     Agreement  to purchase the property.  On October  30,  1995,
     the  sale  closed  with the Partnership receiving  net  sale
     proceeds  of  $1,905,438, which resulted in a  net  gain  of
     $746,293.   At  the  time  of sale,  the  cost  and  related
     accumulated   depreciation  was  $1,375,732  and   $216,587,
     respectively.  A portion of the net sale proceeds  was  used
     to  pay  off the bank note and satisfy the mortgage  on  the
     property.
     
     In  January, 1996, the Cheddar's restaurant in Indianapolis,
     Indiana was destroyed by a fire.  The Partnership reached an
     agreement with the tenant and insurance company which called
     for termination of the Lease, demolition of the building and
     payment to the Partnership of $407,282 for the building  and
     equipment and $49,688 for lost rent.  The property will  not
     be  rebuilt  and the Partnership listed the land  for  sale.
     The  Partnership  recognized  net  disposition  proceeds  of
     $406,892  which resulted in a net gain of $78,290.   At  the
     time  of  disposition,  the  cost  and  related  accumulated
     depreciation  was $512,433 and $183,831, respectively.   The
     Partnership's cost of the land is $261,644.
     
     In  June, 1996, the Partnership entered into an agreement to
     sell the Danny's Family Car Wash in Phoenix, Arizona to  the
     lessee.   On  September 25, 1996, the sale closed  with  the
     Partnership receiving net sale proceeds of $1,690,844  which
     resulted  in a net gain of $347,224.  At the time  of  sale,
     the cost and related accumulated depreciation was $1,688,271
     and $344,651, respectively.
     
     During the first nine months of 1996 and the year 1995,  the
     Partnership  distributed $427,510 and $930,047  of  the  net
     sale  proceeds  to  the Limited and General  Partners  which
     represented  a  return of capital of $18.32 and  $39.82  per
     Limited Partnership Unit, respectively.  In November,  1996,
     the Partnership will distribute an additional $2,828,283  of
     net  proceeds  to  the  Partners as a special  distribution.
     This  represents an additional return of capital of $122.16.
     The  Managing General Partner is in the process of preparing
     a  proxy  statement to propose an amendment to  the  Limited
     Partnership  Agreement that would allow the  Partnership  to
     reinvest  the  majority  of the remaining  net  proceeds  in
     additional properties.
     
     In  May, 1990, Flagship, Inc. (Flagship), the lessee of  the
     J.T.  McCord's  property,  filed for  reorganization,  after
     occupying  the  property for approximately five  years.   In
     March,   1993,   the  Partnership,  along  with   affiliated
     Partnerships which also own J.T. McCord's properties,  filed
     its  own plan of reorganization (the "Plan") with the Court.
     That  Plan  provided for an assignee of the Partnerships  (a
     replacement  tenant) to purchase the assets of Flagship  and
     operate  the restaurants with financial assistance from  the
     Partnerships.   This  Plan  was  expected   to   allow   the
     Partnerships  to  avoid  closing  these  properties,   allow
     operations  to  continue uninterrupted,  and  avoid  further
     costly litigation with Flagship and its creditors.  The Plan
     was  confirmed by the Court and the creditors April 16, 1993
     and became effective July 20, 1993.
     
                                
          AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)
                                
(3)  Investments in Real Estate - (Continued)

     To  entice  the  assignee, WIM, Inc. (WIM), to  operate  the
     restaurants  and  enter  into  the  Lease  Agreements,   the
     Partnership  provided funds to renovate the restaurants  and
     paid  for  operating expenses.  The Partnership's  share  of
     renovation  and  operating expenses during this  period  was
     $222,976, which was expensed in the fourth quarter of  1994.
     However,   WIM  was  not  able  to  operate  the  properties
     profitably  and  was  unable  to  make  rental  payments  as
     provided  in  the Lease Agreements.  To reduce expenses  and
     minimize   the   losses  produced  by  this  property,   the
     Partnership amended the agreement to provide for WIM to make
     annual rental payments of the greater of $60,000 or 5.5%  of
     sales  beginning  October 1, 1994.  In December,  1995,  the
     Partnership  took possession of the property after  WIM  was
     unable  to perform under the terms of the Lease.  While  the
     property  is  being  re-leased or sold, the  Partnership  is
     responsible  for  the  real estate  taxes  and  other  costs
     required to maintain the property.
     
     As  part  of  the  plan, the Partnerships  which  own  these
     properties,  were responsible for an annual payment  to  the
     Creditors Trust of approximately $110,000 for the next  five
     years.   The  Partnership's share of the annual  payment  is
     $23,833.   In  1994,  the Partnership expensed  $103,595  to
     record  this liability and administrative costs  related  to
     the bankruptcy.
     
     In  1995, the Partnership negotiated a settlement, with  the
     trustee,  for a lump sum payment of the minimum  amount  due
     over  the  remaining  term of the plan for  release  of  the
     Partnership and WIM from any other financial obligations and
     reporting  requirements to the trustee.  The  settlement  of
     $73,667 was completed in the fourth quarter of 1995.
     
     In  July, 1996, the Partnership entered into an agreement to
     sell  the  J.T. McCord's in Mesquite, Texas to an  unrelated
     third   party.   In  September,  1996,  the  Agreement   was
     terminated by the purchaser.
     
     The  Partnership  owns  a  65.09% interest  in  the  Sizzler
     restaurant  at the King's Island Theme Park near Cincinnati,
     Ohio  and a 100% interest in a Sizzler restaurant on  Fields
     Ertel  Road  in  Cincinnati, Ohio.  In  January,  1994,  the
     Partnership  closed  the restaurant  at  King's  Island  and
     listed it for sale or lease.  While the property is being re-
     leased or sold, the Partnership is responsible for the  real
     estate  taxes  and  other  costs required  to  maintain  the
     property.   No  rent was received in 1996 or 1995  from  the
     property.
     
     In  September, 1995, the Partnership re-leased the  property
     on  Fields Ertel Road to FFT Cincinnati Ltd. under a  triple
     net  lease  agreement with a primary term of 20 years  which
     may be renewed for up to four consecutive five-year periods.
     The annual base rent is $19,750 for the first lease year and
     $75,000 for the second lease year, with rent increases  each
     subsequent  lease  year of two percent of the  prior  year's
     rent.   The Partnership may also receive percentage rent  if
     sales  exceed certain amounts.  The property is now operated
     as a Bennigan's restaurant.
     
                                
          AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)
                                
(4)  Payable to AEI Fund Management -

     AEI  Fund  Management, Inc. performs the administrative  and
     operating functions for the Partnership.  The payable to AEI
     Fund   Management  represents  the  balance  due  for  those
     services.    This  balance  is  non-interest   bearing   and
     unsecured  and  is  to  be  paid in  the  normal  course  of
     business.

(5)  Long Term Debt -
     
     On  January 31, 1994, the Partnership entered into  a  five-
     year  bank term Note for $195,000 with interest at the prime
     rate  plus  one half percent.  Proceeds from the  Note  were
     advanced  to  WIM for renovation and other restaurant  costs
     related  to  the  J.T. McCord's property.   The  Partnership
     provided a mortgage and a Lease Assignment Agreement on  the
     Applebee's  restaurant in Richmond, Virginia  as  collateral
     for  the  loan.  On October 30, 1995, a portion of  the  net
     proceeds  from the sale of the Applebee's property was  used
     to  pay  off the outstanding principal balance of  the  bank
     Note and satisfy the mortgage.  In the first nine months  of
     1995, interest expense on the Note was $11,651.
     
(6)  Line of Credit -

     In  September, 1994, the Partnership established a  $150,000
     unsecured  line  of  credit  at  Fidelity  Bank  of   Edina,
     Minnesota.   On  January 5, 1995, the  line  of  credit  was
     increased to $400,000.  The line of credit bears interest at
     the  prime rate plus one percent on the outstanding balance,
     which  was  due  on demand, but in any event no  later  than
     January  5,  1996.   The line of credit was  established  to
     provide  short-term  financing to cover any  temporary  cash
     deficits.  In January, 1996, the line of credit expired.  In
     the  first nine months of 1995, interest expense related  to
     the line of credit was $7,016.
     
(7)  Other Income -

     In   March,  1995,  the  Partnership  received  $36,592   of
     insurance proceeds for vandalism to the Kings Island Sizzler
     restaurant.   Damage  to  the property  was  minor  and  the
     Partnership has elected not to make repairs at this time.


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS

Results of Operations

       For the nine months ended September 30, 1996 and 1995, the
Partnership   recognized   rental  income   of   $1,108,861   and
$1,706,114,   respectively.  During   the   same   periods,   the
Partnership  earned  investment income of $245,577  and  $18,490,
respectively.  In 1996, rental income decreased as  a  result  of
the  property  sales  discussed below.  The  decrease  in  rental
income  was  partially offset by rent increases on ten properties
and  additional investment income earned on the net proceeds from
the property sales.


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS  (Continued)

        In  March,  1995,  the Partnership  received  $36,592  of
insurance  proceeds  for vandalism to the  Kings  Island  Sizzler
restaurant.  Damage to the property was minor and the Partnership
has  elected  not  to make repairs at this time.   The  insurance
proceeds are shown as Other Income on the Income Statement.

       In May, 1990, Flagship, Inc. (Flagship), the lessee of the
J.T. McCord's property, filed for reorganization, after occupying
the  property for approximately five years.  In March, 1993,  the
Partnership,  along with affiliated Partnerships which  also  own
J.T.  McCord's  properties, filed its own plan of  reorganization
(the  "Plan") with the Court.  That Plan provided for an assignee
of the Partnerships (a replacement tenant) to purchase the assets
of Flagship and operate the restaurants with financial assistance
from  the  Partnerships.  This Plan was  expected  to  allow  the
Partnerships to avoid closing these properties, allow  operations
to  continue  uninterrupted, and avoid further costly  litigation
with  Flagship and its creditors.  The Plan was confirmed by  the
Court and the creditors April 16, 1993 and became effective  July
20, 1993.

        To  entice the assignee, WIM, Inc. (WIM), to operate  the
restaurants  and enter into the Lease Agreements, the Partnership
provided funds to renovate the restaurants and paid for operating
expenses.   The  Partnership's share of renovation and  operating
expenses  during this period was $222,976, which was expensed  in
the fourth quarter of 1994.  However, WIM was not able to operate
the  properties profitably and was unable to make rental payments
as  provided  in  the Lease Agreements.  To reduce  expenses  and
minimize  the  losses produced by this property, the  Partnership
amended  the  agreement to provide for WIM to make annual  rental
payments  of  the  greater of $60,000 or 5.5% of sales  beginning
October  1,  1994.   In  December,  1995,  the  Partnership  took
possession of the property after WIM was unable to perform  under
the terms of the Lease.  While the property is being re-leased or
sold,  the  Partnership is responsible for the real estate  taxes
and other costs required to maintain the property.

        As  part  of the Plan, the Partnerships which  own  these
properties,  were  responsible  for  an  annual  payment  to  the
Creditors  Trust  of approximately $110,000  for  the  next  five
years.  The Partnership's share of the annual payment is $23,833.
In  1994,  the  Partnership  expensed  $103,595  to  record  this
liability and administrative costs related to the bankruptcy.

       In 1995, the Partnership negotiated a settlement, with the
trustee,  for a lump sum payment of the minimum amount  due  over
the remaining term of the plan for release of the Partnership and
WIM   from   any   other  financial  obligations  and   reporting
requirements  to  the  trustee.  The settlement  of  $73,667  was
completed in the fourth quarter of 1995.

        In  July, 1996, the Partnership entered into an agreement
to  sell  the  J.T. McCord's in Mesquite, Texas to  an  unrelated
third party.  In September, 1996, the Agreement was terminated by
the purchaser.

        The  Partnership owns a 65.09% interest  in  the  Sizzler
restaurant at the King's Island Theme Park near Cincinnati,  Ohio
and  a 100% interest in a Sizzler restaurant on Fields Ertel Road
in  Cincinnati,  Ohio.  In January, 1994, the Partnership  closed
the  restaurant at King's Island and listed it for sale or lease.
While the property is being re-leased or sold, the Partnership is
responsible for the real estate taxes and other costs required to
maintain the property.  No rent was received in 1996 or 1995 from
the property.


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS  (Continued)

       In September, 1995, the Partnership re-leased the property
on  Fields  Ertel Road to FFT Cincinnati Ltd. under a triple  net
lease  agreement  with a primary term of 20 years  which  may  be
renewed for up to four consecutive five-year periods.  The annual
base rent is $19,750 for the first lease year and $75,000 for the
second lease year, with rent increases each subsequent lease year
of  two  percent  of the prior year's rent.  The Partnership  may
also  receive  percentage rent if sales exceed  certain  amounts.
The property is now operated as a Bennigan's restaurant.

        During the nine months ended September 30, 1996 and 1995,
the  Partnership  paid  Partnership  administration  expenses  to
affiliated parties of $221,490 and $227,125, respectively.  These
administration  expenses  include  costs  associated   with   the
management of the properties, processing distributions, reporting
requirements  and correspondence to the Limited Partners.  During
the   same   periods,   the  Partnership   incurred   Partnership
administration  and property management expenses  from  unrelated
parties  of  $139,416 and $75,624, respectively.  These  expenses
represent  direct payments to third parties for legal and  filing
fees,  direct administrative costs, outside audit and  accounting
costs,  taxes, insurance and other property costs.  The  increase
in  these expenses in 1996, when compared to 1995, is the  result
of  expenses  incurred in 1996 related to the J.T.  McCord's  and
Sizzler situations discussed above.

        As  of  September 30, 1996, the Partnership's  annualized
cash  distribution rate was 7.45%, based on the Adjusted  Capital
Contribution.   Distributions of Net Cash  Flow  to  the  General
Partners were subordinated to the Limited Partners as required in
the Partnership Agreement.  As a result, 99% of distributions and
income  were allocated to Limited Partners and 1% to the  General
Partners.

        Inflation  has  had  a  minimal  effect  on  income  from
operations.   It is expected that increases in sales  volumes  of
the  tenants, due to inflation and real sales growth, will result
in  an  increase  in rental income over the term of  the  leases.
Inflation  also  may  cause  the  Partnership's  real  estate  to
appreciate in value.  However, inflation and changing prices  may
also  have  an  adverse impact on the operating  margins  of  the
properties' tenants which could impair their ability to pay  rent
and subsequently reduce the Partnership's Net Cash Flow available
for distributions.

Liquidity and Capital Resources

        During  the  nine months ended September  30,  1996,  the
Partnership's  cash  balances  increased  $1,493,340.   Net  cash
provided  by  operating activities decreased from  $1,421,051  in
1995 to $1,098,883 in 1996 mainly as the result of a decrease  in
revenues as a result of the property sales discussed below and an
increase in expenses in 1996.

       For the nine months ended September 30, 1996 and 1995, net
cash   provided  by  investing  activities  was  $2,097,736   and
$2,472,238,  respectively, which represented cash generated  from
the sale of real estate, as discussed below.

        In March 1995, the lessee of the Applebee's restaurant in
Columbia,  South  Carolina, exercised  an  option  in  the  Lease
Agreement to purchase the property.  On July 28, 1995,  the  sale
closed  with  the  Partnership receiving  net  sale  proceeds  of
$715,545  which resulted in a net gain of $307,167.  At the  time
of  sale,  the  cost  and  related accumulated  depreciation  was
$534,974 and $126,596, respectively.


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS  (Continued)

        In July 1995, the lessee of the Applebee's restaurant  in
Hampton, Virginia, exercised an option in the Lease Agreement  to
purchase the property.  On August 31, 1995, the sale closed  with
the  Partnership receiving net sale proceeds of $1,747,127  which
resulted  in  a net gain of $661,866.  At the time of  sale,  the
cost  and  related  accumulated depreciation was  $1,287,072  and
$201,811, respectively.

       On October 25, 1995, the Partnership sold two of the Jiffy
Lube Auto Care Centers to the lessee.  The Partnership recognized
net  sale proceeds of $322,442, which resulted in a net  gain  of
$78,244  for  the Jiffy Lube in Garland, Texas.  At the  time  of
sale,  the cost and related accumulated depreciation was $303,108
and  $58,910, respectively.  The Partnership recognized net  sale
proceeds  of  $483,653, which resulted in a net gain of  $112,985
for  one  of the Jiffy Lube's in Dallas, Texas.  At the  time  of
sale,  the cost and related accumulated depreciation was $454,300
and $83,632, respectively.

         In   September,  1995,  the  lessee  of  the  Applebee's
restaurant in Richmond, Virginia exercised an option in the Lease
Agreement  to  purchase the property.  On October 30,  1995,  the
sale  closed with the Partnership receiving net sale proceeds  of
$1,905,438,  which resulted in a net gain of  $746,293.   At  the
time  of sale, the cost and related accumulated depreciation  was
$1,375,732 and $216,587, respectively.  A portion of the net sale
proceeds  was  used  to  pay off the bank note  and  satisfy  the
mortgage on the property as discussed below.

        On  April  22,  1993,  the Partnership  sold  a  13.4893%
interest in the Applebee's restaurant in Virginia Beach, Virginia
to  an unrelated third party.  The Partnership owned the Virginia
Beach  property  as  tenants-in-common with the  unrelated  third
party.   The  management of the property was governed  by  a  co-
tenancy agreement between the Partnership and the unrelated third
party, which granted the Partnership the authority to control the
management  of the property.  The Partnership accounted  for  its
interest   under  the  full  consolidation  method  whereby   the
unrelated third party's interest in the property is reflected  in
the Partnership's financial statements as a minority interest.

        In September, 1995, the lessee exercised an option in the
Lease  Agreement to purchase the property.  On November 8,  1995,
the  sale closed with the parties receiving net sale proceeds  of
$1,741,224, which resulted in a net gain of $679,964. At the time
of  sale,  the  cost  and  related accumulated  depreciation  was
$1,279,192 and $217,932, respectively. The Partnership's share of
the  net  sale proceeds and net gain was $1,496,613 and $596,181,
respectively.

         In   January,   1996,   the  Cheddar's   restaurant   in
Indianapolis,  Indiana was destroyed by a fire.  The  Partnership
reached an agreement with the tenant and insurance company  which
called  for termination of the Lease, demolition of the  building
and  payment to the Partnership of $407,282 for the building  and
equipment  and $49,688 for lost rent.  The property will  not  be
rebuilt  and  the  Partnership listed the  land  for  sale.   The
Partnership recognized net disposition proceeds of $406,892 which
resulted  in  a net gain of $78,290.  At the time of disposition,
the  cost  and related accumulated depreciation was $512,433  and
$183,831,  respectively.  The Partnership's cost of the  land  is
$261,644.

        In  June, 1996, the Partnership entered into an agreement
to  sell the Danny's Family Car Wash in Phoenix, Arizona  to  the
lessee.   On  September  25,  1996,  the  sale  closed  with  the
Partnership  receiving  net  sale proceeds  of  $1,690,844  which
resulted  in  a net gain of $347,224.  At the time of  sale,  the
cost  and  related  accumulated depreciation was  $1,688,271  and
$344,651, respectively.


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS  (Continued)

        During  the first nine months of 1996 and the year  1995,
the Partnership distributed $427,510 and $930,047 of the net sale
proceeds to the Limited and General Partners which represented  a
return  of  capital of $18.32 and $39.82 per Limited  Partnership
Unit,  respectively.   In November, 1996,  the  Partnership  will
distribute  an  additional $2,828,283  of  net  proceeds  to  the
Partners   as   a  special  distribution.   This  represents   an
additional  return of capital of $122.16.  The  Managing  General
Partner  is  in  the  process of preparing a proxy  statement  to
propose  an  amendment to the Limited Partnership Agreement  that
would  allow  the  Partnership to reinvest the  majority  of  the
remaining net proceeds in additional properties.

       The Partnership's primary use of cash flow is distribution
and  redemption  payments to Partners.  The Partnership  declares
its  regular  quarterly  distributions before  the  end  of  each
quarter and pays the distribution in the first week after the end
of  each quarter.  The Partnership attempts to maintain a  stable
distribution  rate from quarter to quarter.  Redemption  payments
are  paid  to  redeeming Partners in the fourth quarter  of  each
year.    During   1996,  the  Partnership  will  be  distributing
approximately  $354,000 of net sale proceeds in addition  to  the
regular  quarterly distributions of net cash flow and in addition
to  the  special distribution discussed above.  The distributions
will  be  made  in equal quarterly installments.   As  a  result,
distributions are higher in 1996, when compared to 1995.  For the
nine  months ended September 30, 1996, the other use of cash flow
for   financing  activities  was  related  to  the  decrease   in
distributions payable which was mainly the result  of  a  special
distribution of net sale proceeds of approximately $354,000 which
was accrued in December 1995, but not paid until January 1996.

        The  Partnership may purchase Units from Limited Partners
who have tendered their Units to the Partnership.  Such Units may
be  acquired at a discount.  The Partnership is not obligated  to
purchase  in any year more than 5% of the total number  of  Units
outstanding at the beginning of the year.  In no event shall  the
Partnership  be  obligated to purchase  Units  if,  in  the  sole
discretion  of the Managing General Partner, such purchase  would
impair the capital or operation of the Partnership.

        On  October  1, 1996, seven Limited Partners  redeemed  a
total of 186.5 Partnership Units for $109,813 in accordance  with
the  Partnership Agreement. The Partnership acquired these  Units
using Net Cash Flow from operations.  In prior years, a total  of
twenty-three Limited Partners redeemed 282 Partnership Units  for
$228,029.    The  redemptions  increase  the  remaining   Limited
Partners' ownership interest in the Partnership.

        On January 31, 1994, the Partnership entered into a five-
year bank term Note for $195,000 with interest equal to the prime
rate plus one half percent.  Proceeds from the Note were advanced
to  WIM  for  renovation  and  other restaurant  operating  costs
related  to the J.T. McCord's property.  The Partnership provided
a  mortgage  and  a Lease Assignment Agreement on its  Applebee's
restaurant in Richmond, Virginia as collateral for the loan.   On
October 30, 1995, the Partnership sold the property and a portion
of the net proceeds was used to pay off the outstanding principal
balance of the bank Note and satisfy the mortgage.  In the  first
nine months of 1995, interest expense on the Note was $11,651.

       In September, 1994, the Partnership established a $150,000
unsecured  line  of credit at Fidelity Bank of Edina,  Minnesota.
On January 5, 1995, the line of credit was increased to $400,000.
The  line  of  credit bears interest at the prime rate  plus  one
percent on the outstanding balance, which was due on demand,  but
in  any  event no later than January 5, 1996.  The line of credit
was  established  to provide short-term financing  to  cover  any
temporary  cash deficits.  In January, 1996, the line  of  credit
expired.   In  the  first nine months of 1995,  interest  expense
related to the line of credit was $7,016.


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS  (Continued)

       The continuing rent payments from the properties, together
with  cash generated from the property sales, should be  adequate
to  fund  continuing  distributions and  meet  other  Partnership
obligations on both a short-term and long-term basis.
                                
                                
                   PART II - OTHER INFORMATION
                                
ITEM 1. LEGAL PROCEEDINGS

       There  are no material pending legal proceedings to  which
  the  Partnership  is  a  party or of  which  the  Partnership's
  property is subject.

ITEM 2. CHANGES IN SECURITIES

        None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

        None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        None.

ITEM 5. OTHER INFORMATION

        None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

        a.   Exhibits -
                           Description

             27    Financial Data Schedule  for  period
                   ended September 30, 1996.

        b.   Reports filed on Form 8-K - None.


                           SIGNATURES
                                
     In accordance with the requirements of the Exchange Act, the
Registrant has caused this report to be signed on its  behalf  by
the undersigned, thereunto duly authorized.


Dated:  November 14, 1996     AEI Real Estate Fund XVII
                              Limited Partnership
                              By:  AEI Fund Management XVII, Inc.
                              Its: Managing General Partner



                              By: /s/ Robert P. Johnson
                                      Robert P. Johnson
                                      President
                                      (Principal Executive Officer)



                              By: /s/ Mark E. Larson
                                      Mark E. Larson
                                      Chief Financial Officer
                                      (Principal Accounting Officer)