UNITED STATES
               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:  June 30, 2006

                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.)


    30 East 7th Street, Suite 1300, St. Paul, Minnesota 55101
            (Address of Principal Executive Offices)

                         (651) 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 Exchange Act during the  past
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

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

Transitional Small Business Disclosure Format:   Yes      No [X]



          AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP


                              INDEX




PART I. Financial Information

 Item 1. Statement of Net Assets Available for Liquidation
         As of June 30, 2006 and December 31, 2005

         Statement of Liquidating Activities for the
         Periods ended June 30, 2006

         Statements for the Periods ended June 30, 2005:

           Income

           Cash Flows

           Changes in Partners' Capital

         Notes to Financial Statements

 Item 2. Management's Discussion and Analysis

 Item 3. Controls and Procedures

PART II. Other Information

 Item 1. Legal Proceedings

 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
               JUNE 30, 2006 AND DECEMBER 31, 2005

                           (Unaudited)

                                                    2006           2005

ASSETS:
  Cash and Cash Equivalents                    $ 1,001,894     $ 2,637,924
  Investments in Real Estate                     2,060,000       2,196,000
                                                -----------     -----------
          Total Assets                           3,061,894       4,833,924
                                                -----------     -----------

LIABILITIES:
  Payable to AEI Fund Management, Inc.              10,482          80,440
  Distributions Payable                             45,644       1,579,269
  Unearned Rent                                      4,689               0
                                                -----------     -----------
          Total Liabilities                         60,815       1,659,709
                                                -----------     -----------
NET ASSETS (PARTNERS' CAPITAL) IN LIQUIDATION,
 including 19,557 Limited Partnership
 Units outstanding                             $ 3,001,079     $ 3,174,215
                                                ===========     ===========


 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 JUNE 30, 2006

                           (Unaudited)

                                            Three Months      Six Months

SOURCES OF ADDITIONAL CASH:
  Rent                                      $    38,896       $    94,847
  Interest Income                                11,298            22,118
                                             -----------       -----------
      Total Sources of Additional Cash           50,194           116,965
                                             -----------       -----------

USES OF ADDITIONAL CASH:
  Partnership Administration - Affiliates        11,679            47,529
  Partnership Administration and Property
     Management - Unrelated Parties               3,603            11,804
  Expenses Related to Sale of Real Estate             0            68,748
  Distributions to Partners                      45,645         1,624,914
                                             -----------       -----------
      Total Uses of Additional Cash              60,927         1,752,995
                                             -----------       -----------
DECREASE IN NET ASSETS IN LIQUIDATION
   BEFORE ADJUSTMENTS                           (10,733)       (1,636,030)
                                             -----------       -----------
ADJUSTMENTS OF ESTIMATED VALUES:
  Increase (Decrease) in Net Realizable values of:
     Real Estate                                      0          (136,000)
     Payable to AEI Fund Management, Inc.       (10,463)           69,958
     Distributions Payable                            1         1,533,625
     Unearned Rent                                  (47)           (4,689)
                                             -----------       -----------
      Total Adjustment of Estimated  Values     (10,509)        1,462,894
                                             -----------       -----------

DECREASE IN NET ASSETS IN LIQUIDATION           (21,242)         (173,136)

BEGINNING NET ASSETS IN LIQUIDATION           3,022,321         3,174,215
                                             -----------       -----------
ENDING NET ASSETS IN LIQUIDATION            $ 3,001,079       $ 3,001,079
                                             ===========       ===========

 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 JUNE 30, 2005

                           (Unaudited)

                                               Three Months     Six Months

INTEREST INCOME                                $    10,594      $    26,182

INCOME FROM DISCONTINUED OPERATIONS:
  Rental Income                                    135,414          318,813
  Partnership Administration - Affiliates          (31,891)         (66,854)
  Partnership Administration and Property
     Management - Unrelated Parties                (14,158)         (24,583)
  Depreciation                                     (26,173)         (52,346)
  Gain on Sale of Real Estate                      811,572        2,282,297
                                                -----------      -----------
     Total Income from Discontinued Operations     874,764        2,457,327
                                                -----------      -----------

NET INCOME                                     $   885,358      $ 2,483,509
                                                ===========      ===========

NET INCOME ALLOCATED:
  General Partners                             $    19,250      $    40,091
  Limited Partners                                 866,108        2,443,418
                                                -----------      -----------
                                               $   885,358      $ 2,483,509
                                                ===========      ===========

INCOME PER LIMITED PARTNERSHIP UNIT:
   Continuing Operations                       $       .54      $      1.33
   Discontinued Operations                           43.75           123.61
                                                -----------      -----------
         Total                                 $     44.29      $    124.94
                                                ===========      ===========

Weighted Average Units Outstanding                  19,557           19,557
                                                ===========      ===========

 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 SIX-MONTH PERIOD ENDED JUNE 30, 2005

                           (Unaudited)


CASH FLOWS FROM OPERATING ACTIVITIES:
   Net Income                                        $ 2,483,509

   Adjustments to Reconcile Net Income to Net Cash
   Provided by Operating Activities:
     Depreciation                                         52,346
     Gain on Sale of Real Estate                      (2,282,297)
     Increase in Payable to
        AEI Fund Management, Inc.                         12,709
     Increase in Unearned Rent                            12,276
                                                      -----------
        Total Adjustments                             (2,204,966)
                                                      -----------
        Net Cash Provided By
           Operating Activities                          278,543
                                                      -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Proceeds from Sale of Real Estate                   5,698,579
                                                      -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Decrease in Distributions Payable                  (3,144,777)
   Distributions to Partners                          (5,338,772)
   Redemption Payments                                   (32,157)
                                                      -----------
        Net Cash Used For
           Financing Activities                       (8,515,706)
                                                      -----------
NET DECREASE IN CASH
   AND CASH EQUIVALENTS                               (2,538,584)

CASH AND CASH EQUIVALENTS, beginning of period         4,876,376
                                                      -----------
CASH AND CASH EQUIVALENTS, end of period             $ 2,337,792
                                                      ===========

 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 PERIOD ENDED JUNE 30, 2005

                           (Unaudited)


                                                                   Limited
                                                                 Partnership
                             General      Limited                   Units
                             Partners     Partners      Total    Outstanding


BALANCE, December 31, 2004  $ 36,287   $ 7,660,782  $ 7,697,069   19,626.00

  Distributions              (53,388)   (5,285,384)  (5,338,772)

  Redemption Payments           (321)      (31,836)     (32,157)     (69.00)

  Net Income                  40,091     2,443,418    2,483,509
                             --------   -----------  -----------  ----------
BALANCE, June 30, 2005      $ 22,669   $ 4,786,980  $ 4,809,649   19,557.00
                             ========   ===========  ===========  ==========



 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
                          JUNE 30, 2006

                           (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.  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  the  third quarter of 2006, the Managing General Partner
     plans  to  solicit  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.
     If  a majority of the voting Units are voted in favor of the
     proposal, the Managing General Partner will proceed with the
     planned  liquidation of the Partnership.  If the Partnership
     sells  its  remaining  property  in  2006,  the  Partnership
     anticipates liquidation to occur by December 31, 2006.

     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)  Reclassification -

     Certain items in the prior year's financial statements  have
     been  reclassified  to conform to 2006 presentation.   These
     reclassifications  had no effect on Partners'  capital,  net
     income or cash flows.

(4)  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 December  31,  2005,
     the  estimated real estate values were based upon comparable
     sales  of  similar properties and a tenant  purchase  option
     contained  in a lease.  The adjustment increased Investments
     in  Real  Estate  by  $677,365.   At  March  31,  2006,  the
     estimated  real  estate  values were based  upon  comparable
     sales of similar properties, which resulted in an additional
     adjustment  that  decreased Investments in  Real  Estate  by
     $136,000.   At  June  30,  2006, the estimated  real  estate
     values   were  based  upon  comparable  sales   of   similar
     properties,   which  did  not  result   in   an   additional
     adjustment.   It  is at least reasonably possible  that  the
     amounts  expected to be realized in the liquidation  process
     will change in the near term.

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

(5)  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.

(6)  Discontinued Operations -

     In  July  2003,  the  tenant of the Razzoo's  restaurant  in
     Austin,   Texas  notified  the  Partnership  that   it   was
     experiencing financial difficulty stemming from  lower  than
     expected  sales and that it might not be able to pay  future
     rents.   In  November 2004, the Partnership and  the  tenant
     entered into an agreement to amend the Lease to provide  the
     tenant  with options to purchase the property and  terminate
     the Lease.  Under the purchase option, which expires October
     31, 2006, the tenant can elect to purchase the Partnership's
     interest   in   the  property  for  $442,000.    Under   the
     termination  option, the tenant can elect to  terminate  the
     Lease  by  providing no less than six months  prior  written
     notice  and paying a termination payment equal to one year's
     rent.   The lease cannot be terminated prior to October  31,
     2006.  As part of this agreement, the Partnership received a
     personal  guarantee  from the majority  shareholder  of  the
     tenant for payment of the rent through October 31, 2006.  In
     addition,   the  Partnership  was  reimbursed  for   certain
     expenses  it incurred related to legal action it pursued  in
     connection with this situation.  The tenant has continued to
     pay rent and comply with its lease obligations.

     On  April  30,  2006,  the tenant exercised  its  option  to
     terminate  the lease effective October 31, 2006. The  tenant
     is  required to pay the Partnership a termination payment of
     $56,263  prior  to that date.  The Partnership  is  actively
     marketing  the property for sale and has listed  it  with  a
     real  estate broker in the Austin area.  At March 31,  2006,
     based  on  the lease termination and an analysis  of  market
     conditions  in  the  area,  the  Partnership  recognized   a
     $136,000 adjustment to decrease the estimated net realizable
     value of the property to $306,000.

     During  the first nine months of 2005, the Partnership  sold
     its  remaining  21.3023% interest in the  Champps  Americana
     restaurant   in   Utica,   Michigan,   in   three   separate
     transactions,  to unrelated third parties.  The  Partnership
     received  total  net  sale  proceeds  of  $1,300,705,  which
     resulted  in  a net gain of $616,005.  The cost and  related
     accumulated depreciation of the interests sold was  $731,618
     and  $46,918, respectively.  For the six months  ended  June
     30, 2005, the net gain was $488,804.

     During  the  first six months of 2005, the Partnership  sold
     its  50%  interest  in  the Johnny  Carino's  restaurant  in
     Mansfield,   Texas,  in  four  separate   transactions,   to
     unrelated third parties.  The Partnership received total net
     sale proceeds of $1,460,795, which resulted in a net gain of
     $464,329.  The cost and related accumulated depreciation  of
     the interests sold was $1,028,885 and $32,419, respectively.

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

(6)  Discontinued Operations - (Continued)

     During  the  first six months of 2005, the Partnership  sold
     the  Children's World daycare center in St. Louis, Missouri,
     in  four  separate transactions, to unrelated third parties.
     The   Partnership  received  total  net  sale  proceeds   of
     $1,540,436, which resulted in a net gain of $1,000,885.  The
     cost  and  related accumulated depreciation of the interests
     sold was $950,627 and $411,076, respectively.

     On  July 18, 2005, the Partnership sold the Children's World
     daycare  center in Merrimack, New Hampshire to an  unrelated
     third party.  The Partnership received net sale proceeds  of
     $1,253,115,  which resulted in a net gain of  $583,121.   At
     the   time   of  sale,  the  cost  and  related  accumulated
     depreciation was $1,159,242 and $489,248, respectively.

     During  the  first  quarter of 2005,  the  Partnership  sold
     43.4827%  of the Eckerd drug store in Cicero, New  York,  in
     two  separate transactions, to unrelated third parties.  The
     Partnership  received total net sale proceeds of $1,667,361,
     which  resulted  in a net gain of $328,279.   The  cost  and
     related  accumulated depreciation of the interests sold  was
     $1,379,430 and $40,348, respectively.

     On  November  10, 2005, the Partnership sold  its  remaining
     6.5173%  interest in the Eckerd drug store to  an  unrelated
     third party.  The Partnership received net sale proceeds  of
     $251,124.  The cost and related accumulated depreciation  of
     the interest sold was $206,753 and $6,048, respectively.

     During the fourth quarter of 2005, the Partnership sold  its
     50%  interest in the Johnny Carino's restaurant in Longview,
     Texas,  in  five  separate transactions, to unrelated  third
     parties.   On  an  accrual basis, the  Partnership  received
     total net sale proceeds of $1,631,255.  The cost and related
     accumulated   depreciation  of  the   interests   sold   was
     $1,179,878   and  $55,058,  respectively.  The   Partnership
     incurred  $68,748 of expenses related to the  sale  of  this
     property  that were not paid until 2006.  As a  result,  the
     cash  proceeds from these sales were $1,700,003 for the year
     ended December 31, 2005.

     During   the  first  six  months  of  2006  and  2005,   the
     Partnership distributed $37,135 and $5,117,371 of  net  sale
     proceeds   to  the  Limited  and  General  Partners,   which
     represented  a  return of capital of $1.88 and  $259.04  per
     Limited Partnership Unit, respectively.


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

(6)  Discontinued Operations - (Continued)

     On  June 26, 2006, Timber Lodge Steakhouse, Inc. (TLS),  the
     tenant of the Timber Lodge restaurants filed for Chapter  11
     bankruptcy reorganization.  With the exception of June 2006,
     rents are current and the Partnership expects to continue to
     receive  all  scheduled rents in future  months  unless  the
     Lease  is  rejected by TLS.  If the Leases are assumed,  TLS
     must  comply  with  all  Lease terms.   If  the  Leases  are
     rejected, TLS would be required to return possession of  the
     properties to the Partnership and the Partnership  would  be
     responsible for real estate taxes and other costs associated
     with  maintaining  the  properties.   The  Partnership   has
     evaluated the leases and property values and decided that no
     adjustment  to their net realizable values is  necessary  at
     this time.

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS

        The Management's Discussion and Analysis contains various
"forward  looking  statements"  within  the  meaning  of  federal
securities  laws  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, taxation levels, the sufficiency  of
cash to meet operating expenses, rates of distribution, and other
matters.  These, and other forward looking statements made by the
Partnership,  must 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
    affects 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.


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.


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

       Through  September  30,  2005, the  Partnership  purchased
properties and recorded them in the financial statements  at  the
lower  of  cost  or estimated realizable value.  The  Partnership
initially  recorded the properties at cost (including capitalized
acquisition   expenses).   The  Partnership   was   required   to
periodically  evaluate  the  carrying  value  of  properties   to
determine   whether   their  realizable  value   declined.    For
properties  the  Partnership would hold and  operate,  management
determined   whether  impairment  occurred   by   comparing   the
property's  probability-weighted cash flows to its  then  current
carrying   value.   For  properties  held  for  sale,  management
determined   whether  impairment  occurred   by   comparing   the
property's  estimated fair value less cost to sell  to  its  then
current  carrying value.  If the carrying value was greater  than
the  realizable value, an impairment loss was recorded to  reduce
the  carrying value of the property to its realizable  value.   A
change  in these assumptions or analysis may have caused material
changes in the carrying value of the properties.

       Effective  October  1, 2005, the Partnership  adopted  the
liquidation basis of accounting because, pending the approval  of
the   Limited  Partners,  the  General  Partners  anticipate  the
liquidation  of the Partnership during 2006.  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  June  30,  2006,  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 six months ended June 30, 2006 and 2005, while in
the  liquidation and operating phases, the Partnership recognized
rental income of $90,158 and $318,813, respectively.  During  the
same  periods,  the  Partnership recognized  interest  income  of
$22,118  and  $26,182,  respectively.   In  2006,  rental  income
decreased as a result of property sales.


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

        For the six months ended June 30, 2006 and 2005, while in
the  liquidation  and operating phases, the Partnership  incurred
Partnership  administration expenses from affiliated  parties  of
$46,319 and $66,854, respectively.  These administration expenses
include  costs associated with the management of the  properties,
processing    distributions,    reporting    requirements     and
correspondence  to  the Limited Partners.  As  the  Partnership's
asset  base  decreases due to property sales, it is  allocated  a
smaller  share  of  expenses  that  are  allocated  by  AEI  Fund
Management, Inc. based on the relative assets of the funds  under
management.   During  the same periods, the Partnership  incurred
Partnership administration and property management expenses  from
unrelated  parties  of $11,804 and $24,583, 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.  These expenses  were
higher  in 2005, when compared to 2006, as the result of expenses
incurred in 2005 related to a property that was sold.

        At  June  30, 2006 and December 31, 2005, the Partnership
recognized  adjustments  of estimated  value  of  $1,462,894  and
($182,077), respectively, resulting from adopting the liquidation
basis  of accounting and recording their assets at estimated  net
realizable  value and liabilities at the amount estimated  to  be
paid.

        In  July  2003, the tenant of the Razzoo's restaurant  in
Austin,  Texas notified the Partnership that it was  experiencing
financial difficulty stemming from lower than expected sales  and
that it might not be able to pay future rents.  In November 2004,
the Partnership and the tenant entered into an agreement to amend
the  Lease  to  provide the tenant with options to  purchase  the
property  and  terminate the Lease.  Under the  purchase  option,
which  expires October 31, 2006, the tenant can elect to purchase
the  Partnership's interest in the property for $442,000.   Under
the  termination  option, the tenant can elect to  terminate  the
Lease  by providing no less than six months prior written  notice
and  paying a termination payment equal to one year's rent.   The
lease cannot be terminated prior to October 31, 2006.  As part of
this  agreement,  the Partnership received a  personal  guarantee
from  the majority shareholder of the tenant for payment  of  the
rent through October 31, 2006.  In addition, the Partnership  was
reimbursed  for  certain expenses it incurred  related  to  legal
action  it pursued in connection with this situation.  The tenant
has continued to pay rent and comply with its lease obligations.

        On  April  30, 2006, the tenant exercised its  option  to
terminate  the  lease effective October 31, 2006. The  tenant  is
required to pay the Partnership a termination payment of  $56,263
prior  to  that date.  The Partnership is actively marketing  the
property for sale and has listed it with a real estate broker  in
the  Austin  area.   At  March  31,  2006,  based  on  the  lease
termination and an analysis of market conditions in the area, the
Partnership  recognized  a $136,000 adjustment  to  decrease  the
estimated net realizable value of the property to $306,000.


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

       On June 26, 2006, Timber Lodge Steakhouse, Inc. (TLS), the
tenant  of  the  Timber Lodge restaurants filed  for  Chapter  11
bankruptcy  reorganization.  With the  exception  of  June  2006,
rents  are  current and the Partnership expects  to  continue  to
receive all scheduled rents in future months unless the Lease  is
rejected by TLS.  If the Leases are assumed, TLS must comply with
all  Lease  terms.   If  the Leases are rejected,  TLS  would  be
required   to  return  possession  of  the  properties   to   the
Partnership  and  the Partnership would be responsible  for  real
estate  taxes  and  other costs associated with  maintaining  the
properties.   The  Partnership  has  evaluated  the  leases   and
property  values  and  decided that no adjustment  to  their  net
realizable values is necessary at this time.

        Inflation  has  had  a  minimal  effect  on  income  from
operations.   Leases  may contain rent increases,  based  on  the
increase  in  the  Consumer Price Index over a specified  period,
which  will result in an increase in rental income over the  term
of  the  leases.   In addition, leases may contain  rent  clauses
which  entitle  the  Partnership to receive  additional  rent  in
future  years  if gross receipts for the property exceed  certain
specified  amounts.  Increases in sales volumes of  the  tenants,
due to inflation and real sales growth, may result in an increase
in rental income over the term of the leases.  Inflation also 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.

Liquidity and Capital Resources

       In the third quarter of 2006, the Managing General Partner
plans to solicit 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.  If a majority of the
voting  Units  are voted in favor of the proposal,  the  Managing
General Partner will proceed with the planned liquidation of  the
Partnership.  If the Partnership sells its remaining property  in
2006,  the  Partnership  anticipates  liquidation  to  occur   by
December 31, 2006.

        During the six months ended June 30, 2006, while  in  the
liquidation  phase, the Partnership's Net Assets  in  Liquidation
decreased  $173,136  mainly as a result  of  a  decrease  in  the
estimated  net  realizable value of Investments in  Real  Estate.
During the six months ended June 30, 2005, while in the operating
phase, the Partnership's cash balances decreased $2,538,584 as  a
result  of distributions paid to the Partners in excess  of  cash
generated from operating and investing activities.

       During the first nine months of 2005, the Partnership sold
its   remaining  21.3023%  interest  in  the  Champps   Americana
restaurant in Utica, Michigan, in three separate transactions, to
unrelated third parties.  The Partnership received total net sale
proceeds of $1,300,705, which resulted in a net gain of $616,005.
The  cost  and related accumulated depreciation of the  interests
sold  was $731,618 and $46,918, respectively.  For the six months
ended June 30, 2005, the net gain was $488,804.


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

        During the first six months of 2005, the Partnership sold
its  50% interest in the Johnny Carino's restaurant in Mansfield,
Texas, in four separate transactions, to unrelated third parties.
The  Partnership received total net sale proceeds of  $1,460,795,
which  resulted in a net gain of $464,329.  The cost and  related
accumulated depreciation of the interests sold was $1,028,885 and
$32,419, respectively.

        During the first six months of 2005, the Partnership sold
the  Children's World daycare center in St. Louis,  Missouri,  in
four  separate  transactions, to unrelated  third  parties.   The
Partnership received total net sale proceeds of $1,540,436, which
resulted  in  a  net gain of $1,000,885.  The  cost  and  related
accumulated  depreciation of the interests sold was $950,627  and
$411,076, respectively.

        On  July  18,  2005, the Partnership sold the  Children's
World  daycare center in Merrimack, New Hampshire to an unrelated
third  party.   The  Partnership received net  sale  proceeds  of
$1,253,115,  which resulted in a net gain of  $583,121.   At  the
time  of sale, the cost and related accumulated depreciation  was
$1,159,242 and $489,248, respectively.

        During  the  first quarter of 2005, the Partnership  sold
43.4827%  of  the Eckerd drug store in Cicero, New York,  in  two
separate   transactions,  to  unrelated   third   parties.    The
Partnership received total net sale proceeds of $1,667,361, which
resulted  in  a  net  gain of $328,279.   The  cost  and  related
accumulated depreciation of the interests sold was $1,379,430 and
$40,348, respectively.

        On  November 10, 2005, the Partnership sold its remaining
6.5173%  interest in the Eckerd drug store to an unrelated  third
party.   The Partnership received net sale proceeds of  $251,124.
The  cost  and  related accumulated depreciation of the  interest
sold was $206,753 and $6,048, respectively.

        During  the fourth quarter of 2005, the Partnership  sold
its  50%  interest in the Johnny Carino's restaurant in Longview,
Texas, in five separate transactions, to unrelated third parties.
On  an  accrual  basis, the Partnership received total  net  sale
proceeds   of  $1,631,255.   The  cost  and  related  accumulated
depreciation  of the interests sold was $1,179,878  and  $55,058,
respectively.  The  Partnership  incurred  $68,748  of   expenses
related  to  the sale of this property that were not  paid  until
2006.   As  a  result, the cash proceeds from  these  sales  were
$1,700,003 for the year ended December 31, 2005.

       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 on a quarterly basis.


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

        For  the  six  months ended June 30, 2006 and  2005,  the
Partnership  declared  distributions of $91,289  and  $5,338,772,
respectively, which were distributed 99% to the Limited  Partners
and  1%  to the General Partners.  The Limited Partners  received
distributions of $90,376 and $5,285,384 and the General  Partners
received  distributions  of $913 and  $53,388  for  the  periods,
respectively.  In March, June, September and December  2005,  the
Partnership   declared  special  distributions   of   $4,040,404,
$1,010,101, $2,020,202 and $1,515,152, respectively, of net  sale
proceeds.

        During  the  first  six  months of  2006  and  2005,  the
Partnership  distributed  $37,135  and  $5,117,371  of  net  sale
proceeds to the Limited and General Partners, which represented a
return  of  capital of $1.88 and $259.04 per Limited  Partnership
Unit, respectively.

        The  Partnership may acquire 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  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 January 1, 2005, six Limited Partners redeemed a total
of  69  Partnership  Units for $31,836  in  accordance  with  the
Partnership  Agreement.   The Partnership  acquired  these  Units
using Net Cash Flow from operations.  In prior years, a total  of
304  Limited  Partners  redeemed 3,762.7  Partnership  Units  for
$2,753,267.   The  redemptions  increase  the  remaining  Limited
Partners' ownership interest in the Partnership.  As a result  of
these   redemption  payments  and  pursuant  to  the  Partnership
Agreement, the General Partners received distributions of $321 in
2005.

       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. CONTROLS AND PROCEDURES.

       (a) Evaluation of 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  its  disclosure
controls  and procedures (as defined in Rule 13a-14(c) under  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,  the
disclosure  controls  and  procedures  of  the  Partnership   are
adequately  designed to ensure that information  required  to  be
disclosed  by  us  in  the reports we file or  submit  under  the
Exchange  Act  is recorded, processed, summarized  and  reported,
within the time periods specified in applicable rules and forms.

       (b) Changes in internal controls

         There   were   no  significant  changes  made   in   the
Partnership's  internal controls during the  most  recent  period
covered  by  this  report that have materially affected,  or  are
reasonably   likely  to  materially  affect,  the   Partnership's
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  2.UNREGISTERED  SALES  OF  EQUITY  SECURITIES  AND  USE  OF
        PROCEEDS

        (a)  During  the  period  covered  by  this  report,  the
Partnership  did  not  sell any equity securities  that  are  not
registered under the Securities Act of 1933.

       (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 of the Units 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.

                   PART II - OTHER INFORMATION
                           (Continued)

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

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


Dated:  August 4, 2006        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/ Patrick W Keene
                                      Patrick W. Keene
                                      Chief Financial Officer
                                      (Principal Accounting Officer)