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

                            FORM 10-Q

        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
             OF THE SECURITIES EXCHANGE ACT OF 1934

       For the quarterly period ended:  September 30, 2008

               Commission File Number:  000-17467


            AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
     (Exact name of registrant as specified in its charter)


     State of Minnesota                    41-1603719
(State or other jurisdiction of         (I.R.S. Employer
incorporation or organization)        Identification No.)


    30 East 7th Street, Suite 1300, St. Paul, Minnesota 55101
             (Address of principal executive offices)

                         (651) 227-7333
                 (Registrant's telephone number)

                        Not Applicable
 (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.           [X] Yes      No

Indicate  by  check  mark  whether  the  registrant  is  a  large
accelerated filer, an accelerated filer, a non-accelerated filer,
or  a  smaller reporting company.  See the definitions of  "large
accelerated  filer," "accelerated filer" and  "smaller  reporting
company" in Rule 12b-2 of the Exchange Act.

   Large accelerated filer          Accelerated filer

   Non-accelerated filer            Smaller reporting company  [X]

Indicate by check mark whether the registrant is a shell  company
(as  defined  in  Rule 12b-2 of the Exchange  Act).   Yes  [X] No



          AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP

                              INDEX


Part I - Financial Information

 Item 1. Financial Statements:

        Statement of Net Assets Available for Liquidation
          as of September 30, 2008 and December 31, 2007

        Statement of Liquidating Activities for the
          Periods ended September 30, 2008 and 2007

        Notes to Financial Statements

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

 Item 3. Quantitative and Qualitative Disclosures About Market Risk

 Item 4T. Controls and Procedures

Part II - Other Information

 Item 1. Legal Proceedings

 Item 1A.Risk  Factors

 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 Item 3. Defaults Upon Senior Securities

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

 Item 5. Other Information

 Item 6. Exhibits

         Signatures

<PAGE>
          AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
        STATEMENT OF NET ASSETS AVAILABLE FOR LIQUIDATION
            SEPTEMBER 30, 2008 AND DECEMBER 31, 2007




                                                   2008          2007

ASSETS:
  Cash and Cash Equivalents                   $   872,264    $   927,152
  Investments in Real Estate                    1,260,000      1,435,000
                                               -----------    -----------
          Total Assets                          2,132,264      2,362,152
                                               -----------    -----------

LIABILITIES:
  Payable to AEI Fund Management, Inc.             11,108          9,820
  Real Estate Taxes Payable                        42,313         21,249
  Distributions Payable                            41,115         41,115
  Unearned Rent                                     9,501              0
                                               -----------    -----------
          Total Liabilities                       104,037         72,184
                                               -----------    -----------
NET ASSETS (PARTNERS' CAPITAL) IN LIQUIDATION,
  including  19,557 Limited Partnership
  Units outstanding                           $ 2,028,227    $ 2,289,968
                                               ===========    ===========


 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
</PAGE>
<PAGE>
          AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
               STATEMENT OF LIQUIDATING ACTIVITIES
               FOR THE PERIODS ENDED SEPTEMBER 30

                                    Three Months Ended     Nine Months Ended
                                   9/30/08      9/30/07   9/30/08     9/30/07
SOURCES OF ADDITIONAL CASH:
   Rent                          $  28,503   $  32,436  $  93,374  $  105,990
   Real Estate Tax Reimbursements   21,249      25,499     63,745      33,998
  Interest Income                    4,077      11,668     14,812      35,775
                                  ---------   ---------  ---------   ---------
    Total Sources of
     Additional Cash                53,829      69,603    171,931     175,763
                                  ---------   ---------  ---------   ---------
USES OF ADDITIONAL CASH:
  Partnership  Administration -
     Affiliates                     10,089      19,100     43,261      67,219
  Partnership Administration and
     Property Management  -
     Unrelated Parties               2,911       6,901     15,008      20,485
  Real Estate Taxes Paid                 0           0     42,681           0
  Distributions to Partners         42,630      43,711    125,869     442,172
                                  ---------   ---------  ---------   ---------
     Total Uses of
       Additional Cash              55,630      69,712    226,819     529,876
                                  ---------   ---------  ---------   ---------
DECREASE IN NET
  ASSETS IN LIQUIDATION
  BEFORE ADJUSTMENTS                (1,801)       (109)   (54,888)   (354,113)
                                  ---------   ---------  ---------   ---------
ADJUSTMENTS OF ESTIMATED VALUES:
  Increase (Decrease) in Net Realizable values of:
     Receivable                          0           0          0        (636)
     Real Estate                  (175,000)          0   (175,000)          0
     Payable to AEI Fund
       Management, Inc.             (4,265)     (2,032)    (1,288)       (258)
     Real Estate Taxes Payable     (21,249)    (25,499)   (21,064)    (33,998)
     Distributions Payable           1,515         576          0     310,106
     Unearned Rent                  (9,501)          0     (9,501)          0
                                 ---------   ---------  ---------   ---------
      Total Adjustment of
          Estimated Values        (208,500)    (26,955)  (206,853)    275,214
                                 ---------   ---------  ---------   ---------
DECREASE IN NET ASSETS
    IN  LIQUIDATION               (210,301)    (27,064)  (261,741)    (78,899)

BEGINNING NET ASSETS
      IN LIQUIDATION             2,238,528   2,337,913  2,289,968   2,389,748
                                 ---------   ---------  ---------   ---------
ENDING NET ASSETS
    IN  LIQUIDATION             $2,028,227  $2,310,849 $2,028,227  $2,310,849
                                 =========   =========  =========   =========

 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
</PAGE>
<PAGE>
          AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
                  NOTES TO FINANCIAL STATEMENTS
                       SEPTEMBER 30, 2008

(1)  The  condensed  statements included herein have been  prepared
     by  the  registrant, 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  registrant
     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
     registrant'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.  Robert P.  Johnson,
     the  President  and  sole director of  AFM,  serves  as  the
     Individual   General  Partner.   AFM  is  a   wholly   owned
     subsidiary  of AEI Capital Corporation of which Mr.  Johnson
     is  the  majority  shareholder.  AEI Fund  Management,  Inc.
     ("AEI"),  an  affiliate of AFM, performs the  administrative
     and operating functions for the Partnership.

     The   terms  of  the  Partnership  offering  called  for   a
     subscription  price of $1,000 per Limited Partnership  Unit,
     payable   on  acceptance  of  the  offer.   The  Partnership
     commenced  operations  on February  10,  l988  when  minimum
     subscriptions    of   2,000   Limited   Partnership    Units
     ($2,000,000)  were  accepted.  The  offering  terminated  on
     November  1, 1988 when the one-year offering period expired.
     The  Partnership received subscriptions for 23,388.7 Limited
     Partnership   Units.   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 operations, 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 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  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 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 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 contribution.


          AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)

(2)  Organization - (Continued)

     In September 2007, the Managing General Partner solicited by
     mail  a  proxy statement seeking the consent of the  Limited
     Partners,  as  required by Section 6.1  of  the  Partnership
     Agreement,  to  initiate the final disposition,  liquidation
     and  distribution of all of the Partnership's properties and
     assets  within  the  next year.  On October  16,  2007,  the
     proposal  was  approved with a majority of  Units  voted  in
     favor  of  the proposal.  As a result, the Managing  General
     Partner  will  proceed with the planned liquidation  of  the
     Partnership.    If  the  Partnership  sells  its   remaining
     property in 2008, the Partnership anticipates liquidation to
     occur  by December  31, 2008.  However, it is unlikely  that
     the  property will be sold in 2008, so liquidation  probably
     will occur in 2009.

     Financial Statement Presentation

       Because   liquidation  was  anticipated,  the  Partnership
       changed its basis of accounting after September 30,  2005,
       from  the  going  concern basis to the liquidation  basis.
       Effective  October 1, 2005, the Partnership  measures  its
       assets and liabilities at the amounts of cash expected  in
       liquidation  and  reports changes in estimates  when  they
       are   known.    The   accounts  of  the  Partnership   are
       maintained  on  the accrual basis of accounting  for  both
       federal   income  tax  purposes  and  financial  reporting
       purposes.

(3)  Investments in Real Estate -

     Effective  with  the  decision to  liquidate,  the  carrying
     amounts  of assets and liabilities were adjusted from  their
     historical bases to the amounts of cash expected from  their
     realization  and settlement.  Because of the expected  short
     liquidation period, the effects of discounting would not  be
     significant  and have been ignored.  At September  30,  2008
     and December 31, 2007, the estimated real estate values were
     based  upon comparable sales of similar properties.   It  is
     reasonably possible that the amounts expected to be realized
     in the liquidation process may change in the near term.

     On June 26, 2006, Timber Lodge Steakhouse, Inc. ("TLS"), the
     tenant of the Timber Lodge restaurants filed for Chapter  11
     bankruptcy reorganization.  In September 2006, TLS submitted
     a written proposal requesting rent concessions.  In February
     2007,  the  Partnership and other owners of  the  properties
     signed Lease amendments to reduce the annual rent by 15% for
     the  Rochester property and 10% for the St. Cloud  property.
     As  a result of these amendments, TLS submitted a request to
     the  bankruptcy court to assume the Leases.  The request was
     approved by the court.  Through June 30, 2008, TLS paid  all
     rent due under the Leases as amended.

          AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)

(3)  Investments in Real Estate - (Continued)

     In  August  2008, TLS completed an asset sale to Timberlodge
     Steakhouse Acquisition, LLC ("TSA"), a subsidiary  of  Taher
     Food  Management, a Minneapolis-based food services company.
     After the asset sale, TLS reported to its creditors that  it
     was  insolvent  and would be unable to pay amounts  owed  to
     unsecured creditors.  As a result, the Partnership will  not
     be  able  to  collect the July rent for the properties.   In
     exchange  for  a  rent reduction of approximately  12%,  TSA
     entered into Lease amendments, effective August 1, 2008, for
     both  properties  and  assumed the responsibilities  of  the
     tenant.     At  September  30,  2008,  based  on  the  Lease
     amendments and an analysis of market conditions in the area,
     the Partnership recognized a $175,000 adjustment to decrease
     the estimated net realizable value of the properties.

     During  the  first  nine  months  of  2008  and  2007,   the
     Partnership  distributed net sale proceeds  of  $98,081  and
     $36,061   to   the  Limited  and  General  Partners,   which
     represented  a  return of capital of  $4.96  and  $1.83  per
     Limited  Partnership Unit, respectively.  The proceeds  were
     generated from sales completed prior to 2007.

(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.

ITEM 2. MANAGEMENT'S  DISCUSSION  AND  ANALYSIS   OF   FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS.

        This  section contains "forward looking statements" which
represent management's expectations or beliefs concerning  future
events, including statements regarding anticipated application of
cash, expected returns from rental income, growth in revenue, the
sufficiency  of  cash  to  meet  operating  expenses,  rates   of
distribution,  and  other  matters.   These,  and  other  forward
looking  statements,  should be evaluated in  the  context  of  a
number  of  factors  that may affect the Partnership's  financial
condition and results of operations, including the following:

     Market  and  economic conditions which affect the  value
     of  the  properties the Partnership owns and  the  cash
     from rental income such properties generate;

     the  federal  income tax consequences of rental  income,
     deductions,  gain  on  sales and other  items  and  the
     effects of these consequences for the Partners;

     resolution  by  the  General Partners  of  conflicts  with
     which they may be confronted;

     the effect of tenant defaults; and

     the  condition of the industries in which the  tenants  of
     properties owned by the Partnership operate.

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

The Application of Critical Accounting Policies

        The preparation of the Partnership's financial statements
requires  management to make estimates and assumptions  that  may
affect the reported amounts of assets, liabilities, revenues  and
expenses,  and  related  disclosure  of  contingent  assets   and
liabilities. Management evaluates these estimates on  an  ongoing
basis,  including  those related to the carrying  value  of  real
estate  and  the  allocation  by AEI  Fund  Management,  Inc.  of
expenses  to  the  Partnership as opposed  to  other  funds  they
manage.

       Effective  October  1, 2005, the Partnership  adopted  the
liquidation  basis  of  accounting because the  General  Partners
anticipated the liquidation of the Partnership during 2006.   The
timetable  for final disposition of the assets was  delayed  when
the tenant in two of the Partnership's remaining properties filed
for Chapter 11 bankruptcy reorganization on June 26, 2006.  While
the  tenant  was in bankruptcy, the General Partners believed  it
would have been difficult to find a buyer that would have paid  a
fair  value  for  the  properties.  In  2008,  the  tenant  again
experienced financial difficulties which made it harder  to  sell
the  properties.  The General Partners now anticipate liquidation
to  occur during 2009.  In accordance with the liquidation  basis
of  accounting,  assets  are  recorded  at  their  estimated  net
realizable value (the amount of cash expected to be received) and
liabilities are recorded at the amount estimated to  be  paid  to
creditors  and  Partners.  At September 30, 2008,  the  estimated
real  estate values were based upon comparable sales  of  similar
properties.  Any changes in these estimates could cause  material
changes in the net assets in liquidation.

       AEI  Fund Management, Inc. allocates expenses to  each  of
the  funds  they manage primarily on the basis of the  number  of
hours  devoted  by their employees to each fund's affairs.   They
also  allocate  expenses at the end of each month  that  are  not
directly related to a fund's operations based upon the number  of
investors  in the fund and the fund's capitalization relative  to
other  funds  they  manage.   The  Partnership  reimburses  these
expenses  subject  to  detailed  limitations  contained  in   the
Partnership Agreement.

         Management   of  the  Partnership  has   discussed   the
development  and selection of the above accounting estimates  and
the management discussion and analysis disclosures regarding them
with the managing partner of the Partnership.

Results of Operations

        For  the  nine months ended September 30, 2008 and  2007,
while in the liquidation phase, the Partnership recognized rental
income  of  $93,374 and $105,990, respectively.  In 2008,  rental
income  decreased due to lease amendments that reduced  the  rent
for  the Timber Lodge restaurants as discussed below.  During the
same  periods,  the  Partnership recognized  interest  income  of
$14,812 and $35,775, respectively.  Interest income decreased due
to  lower  money market interest rates in 2008, when compared  to
the same period in 2007.

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

        The  tenant  of  the Timber Lodge restaurants  is  making
additional  monthly  payments to fund a real  estate  tax  escrow
account.   During the nine months ended September 30,  2008,  the
Partnership received payments of $63,745.  During the last  seven
months of 2007, the Partnership received payments of $63,746.  In
May  2008, the Partnership paid $42,681 to the taxing authorities
for real estate taxes due for the first half of 2008.  In October
2007, the Partnership paid $42,497 to the taxing authorities  for
real  estate  taxes  due  for  the  second  half  of  2007.   The
Partnership  will  hold  the remaining funds  until  future  real
estate  taxes  are due and then pay them directly to  the  taxing
authorities.  The real estate tax payable represents the  balance
of  the tenant's real estate tax payments that have not been paid
to the taxing authorities.

        For  the  nine months ended September 30, 2008 and  2007,
while   in   the  liquidation  phase,  the  Partnership  incurred
Partnership  administration expenses from affiliated  parties  of
$44,549 and $67,477, 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  $15,008   and
$21,121,  respectively.  These expenses represent direct payments
to third parties for legal and filing fees, direct administrative
costs,  outside audit costs, taxes, insurance and other  property
costs.

       At September 30, 2008 and 2007, the Partnership recognized
adjustments  of  estimated  values of  ($206,853)  and  $275,214,
respectively,  resulting from adopting the liquidation  basis  of
accounting  and recording its assets at estimated net  realizable
value and liabilities at the amount estimated to be paid.

        On  June 26, 2006, Timber Lodge Steakhouse, Inc. ("TLS"),
the  tenant of the Timber Lodge restaurants filed for Chapter  11
bankruptcy  reorganization.  In September 2006, TLS  submitted  a
written proposal requesting rent concessions.  In February  2007,
the  Partnership and other owners of the properties signed  Lease
amendments  to  reduce the annual rent by 15% for  the  Rochester
property  and  10% for the St. Cloud property.  As  a  result  of
these amendments, TLS submitted a request to the bankruptcy court
to  assume  the Leases.  The request was approved by  the  court.
Through June 30, 2008, TLS paid all rent due under the Leases  as
amended.

       In August 2008, TLS completed an asset sale to Timberlodge
Steakhouse  Acquisition, LLC ("TSA"), a subsidiary of Taher  Food
Management, a Minneapolis-based food services company.  After the
asset  sale, TLS reported to its creditors that it was  insolvent
and  would  be unable to pay amounts owed to unsecured creditors.
As a result, the Partnership will not be able to collect the July
rent  for  the  properties.  In exchange for a rent reduction  of
approximately  12%, TSA entered into Lease amendments,  effective
August   1,   2008,   for  both  properties   and   assumed   the
responsibilities of the tenant.  At September 30, 2008, based  on
the  Lease amendments and an analysis of market conditions in the
area,  the  Partnership  recognized  a  $175,000  adjustment   to
decrease the estimated net realizable value of the properties.

        Inflation  has  had  a  minimal  effect  on  income  from
operations.  Inflation may cause the real estate to appreciate in
value.   However,  inflation  and changing  prices  may  have  an
adverse  impact  on  the  operating margins  of  the  properties'
tenants,  which  could  impair their  ability  to  pay  rent  and
subsequently   reduce   the   Net   Cash   Flow   available   for
distributions.


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

Liquidity and Capital Resources

        In September 2007, the Managing General Partner solicited
by  mail  a  proxy statement seeking the consent of  the  Limited
Partners,   as  required  by  Section  6.1  of  the   Partnership
Agreement,  to  initiate the final disposition,  liquidation  and
distribution  of all of the Partnership's properties  and  assets
within  the  next  year.  On October 16, 2007, the  proposal  was
approved with a majority of Units voted in favor of the proposal.
As  a result, the Managing General Partner will proceed with  the
planned liquidation of the Partnership.  If the Partnership sells
its  remaining  property  in  2008, the  Partnership  anticipates
liquidation  to  occur  by December 31,  2008.   However,  it  is
unlikely  that the property will be sold in 2008, so  liquidation
probably will occur in 2009.

        During the nine months ended September 30, 2008, while in
the   liquidation  phase,  the  Partnership's   Net   Assets   in
Liquidation decreased $261,741 as a result of distributions  paid
to  the  Partners  in  excess of cash  generated  from  operating
activities  and a decrease in the estimated net realizable  value
of  property.  During the nine months ended September  30,  2007,
while  in the liquidation phase, the Partnership's Net Assets  in
Liquidation  decreased $78,899 as a result of distributions  paid
to  the  Partners  in  excess of cash  generated  from  operating
activities.

       The Partnership's primary use of cash flow is distribution
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.

       For the nine months ended September 30, 2008 and 2007, the
Partnership  declared  distributions of  $125,869  and  $132,066,
respectively.   The  Limited Partners received  distributions  of
$122,111   and   $122,106  and  the  General  Partners   received
distributions of $3,758 and $9,960 for the periods, respectively.
During  the  first nine months of 2008 and 2007, the  Partnership
distributed  net  sale proceeds of $98,081  and  $36,061  to  the
Limited  and  General  Partners, which represented  a  return  of
capital  of  $4.96  and  $1.83  per  Limited  Partnership   Unit,
respectively.   The proceeds were generated from sales  completed
prior to 2007.

       The continuing rent payments from the properties, together
with  cash  generated from property sales, should be adequate  to
fund   continuing   distributions  and  meet  other   Partnership
obligations.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

       Not applicable.

ITEM 4T. CONTROLS AND PROCEDURES.

       (a)  Disclosure Controls and Procedures.

        Under  the  supervision  and with  the  participation  of
management, including its President and Chief Financial  Officer,
the  Managing  General Partner of the Partnership  evaluated  the
effectiveness  of  the  design and operation  of  our  disclosure
controls  and procedures (as defined in Rule 13a-15(e) under  the
Securities  Exchange  Act of 1934 (the "Exchange  Act")).   Based
upon  that evaluation, the President and Chief Financial  Officer
of  the Managing General Partner concluded that, as of the end of
the  period  covered by this report, our disclosure controls  and
procedures  were effective in ensuring that information  required
to be disclosed by us in the reports that we file or submit under
the  Exchange Act is recorded, processed, summarized and reported
within  the time periods specified in applicable rules and  forms
and  that  such  information is accumulated and  communicated  to
management,  including the President and Chief Financial  Officer
of  the  Managing General Partner, in a manner that allows timely
decisions regarding required disclosure.

       (b)  Changes in Internal Control Over Financial Reporting.

        During  the  most recent period covered by  this  report,
there  has  been no change in our internal control over financial
reporting  (as defined in Rule 13a-15(f) under the Exchange  Act)
that  has  materially  affected,  or  is  reasonably  likely   to
materially affect, our internal control over financial reporting.


                   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 1A. RISK FACTORS.

       Not applicable.

                   PART II - OTHER INFORMATION
                           (Continued)

ITEM 2. UNREGISTERED  SALES  OF  EQUITY  SECURITIES  AND  USE  OF
        PROCEEDS.

       (a) None.

       (b) Not applicable.

        (c) Pursuant to Section 7.7 of the Partnership Agreement,
as  amended, each Limited Partner has the right to present  Units
to  the  Partnership  for purchase by submitting  notice  to  the
Managing  General Partner.  The purchase price of  the  Units  is
equal to 90% of the net asset value per Unit as determined by the
Managing General Partner in accordance with the provisions of the
Partnership  Agreement.  Units tendered to  the  Partnership  are
redeemed  at  the purchase price established for the  quarter  in
which the Partnership received a notice at least 60 days prior to
the  repurchase  dates of January 1st, April 1st,  July  1st  and
October   1st   subject  to  the  following   limitations.    The
Partnership is not obligated to purchase in any year more than 5%
of  the 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.   During  the period covered  by  this  report,  the
Partnership did not purchase any Units.

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

    31.1  Certification  of Chief Executive  Officer  of  General
    Partner pursuant to Rule 15d-14(a)(17 CFR 240.15d-14(a))  and
    Section 302 of the Sarbanes-Oxley Act of 2002.

    31.2  Certification  of Chief Financial  Officer  of  General
    Partner pursuant to Rule 15d-14(a)(17 CFR 240.15d-14(a))  and
    Section 302 of the Sarbanes-Oxley Act of 2002.

    32    Certification  of  Chief Executive  Officer  and  Chief
    Financial Officer of General Partner pursuant to Section  906
    of the Sarbanes-Oxley Act of 2002.



                           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.


Dated:  November 7, 2008      AEI Real Estate Fund XVII
                              Limited Partnership
                              By:  AEI Fund Management XVII, Inc.
                              Its: Managing General Partner



                              By: ROBERT P JOHNSON
                                  ROBERT P JOHNSON
                                  President
                                  (Principal Executive Officer)



                              By: PATRICK W KEENE
                                  PATRICK W KEENE
                                  Chief Financial Officer
                                  (Principal Accounting Officer)