================================================================================

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

                              ____________________

                                    FORM 10-Q
                              ____________________
(MARK  ONE)

[X]     QUARTERLY  REPORT  PURSUANT  TO  SECTION  13  OR 15(D) OF THE SECURITIES
        EXCHANGE  ACT  OF  1934

        FOR  THE  QUARTER  ENDED  SEPTEMBER  30,  2001

[ ]     TRANSITION  REPORT  PURSUANT  TO SECTION 13 OR 15(D) OF THE SECURITIES
        EXCHANGE  ACT  OF  1934

        FOR THE TRANSITION PERIOD FROM _______________ TO______________.

                         COMMISSION FILE NUMBER 0-27116

                                ________________

                             PYRAMID BREWERIES INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

               WASHINGTON                                 91-1258355
   (State or other jurisdiction of                      (IRS Employer
    incorporation or organization)                    Identification No.)

                           91 SO. ROYAL BROUGHAM WAY,
                               SEATTLE, WA 98134
              (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (206) 682-8322

                                ________________

     Indicate  by  check  mark  whether the registrant (1) has filed all reports
required  to  be  filed by Section 13 or 15(d) of the Securities Exchange Act of
1934  during  the  preceding  12  months  (or  for  such shorter period that the
registrant  was required to file such reports), and (2) has been subject to such
filing  requirements  for  the  past  90  days.  Yes  X  No    .
                                                     ---    ---

Common  Stock,  par  value  of  $.01 per share: 8,305,892 shares of common stock
outstanding  as  of  September  30,  2001



                   Pages 1 of 14 sequentially numbered pages.
<PAGE>
<TABLE>
<CAPTION>
                             PYRAMID BREWERIES INC.
                                    FORM 10-Q
        FOR THE QUARTERLY AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2001

                                  TABLE OF CONTENTS

                                                                                PAGE
                                                                                ----
<S>      <C>                                                                    <C>
PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements (Unaudited)
         Balance Sheets
           September 30, 2001 and December 31, 2000. . . . . . . . . . . . . . .   3
         Statements of Operations
           Three Month and Nine Month Periods Ended September 30, 2001 and 2000    4
         Statements of Cash Flows
           Nine Month Periods Ended September 30, 2001 and 2000. . . . . . . . .   5
         Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . .   6
Item 2.  Management's Discussion and Analysis of Financial Condition
           and Results of Operations. . . . . . . . . . . . . . . . . . . . . .   10

PART II  OTHER INFORMATION
Item 6.  Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . .   13

         SIGNATURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   14
</TABLE>


                                        2
<PAGE>
<TABLE>
<CAPTION>
                         ITEM 1 -- FINANCIAL STATEMENTS

                             PYRAMID BREWERIES INC.

                                 BALANCE SHEETS
                                   (Unaudited)


                                                              September 30,    December 31,
                                                                  2001            2000
                                                             ---------------  --------------
<S>                                                          <C>              <C>
CURRENT ASSETS:
  Cash and cash equivalents . . . . . . . . . . . . . . . .  $    5,956,960   $   6,444,145
  Accounts receivable, net. . . . . . . . . . . . . . . . .       1,370,356       1,664,466
  Inventories . . . . . . . . . . . . . . . . . . . . . . .       1,522,859       1,164,388
  Prepaid expenses and other. . . . . . . . . . . . . . . .         720,123         710,559
  Deferred income taxes . . . . . . . . . . . . . . . . . .         332,635         332,635
                                                             ---------------  --------------
    Total current assets. . . . . . . . . . . . . . . . . .       9,902,933      10,316,193
                                                             ---------------  --------------
Fixed assets, net . . . . . . . . . . . . . . . . . . . . .      20,181,787      21,125,892
Note receivable from officer for exercise of stock options.         109,921               -
Deferred income taxes . . . . . . . . . . . . . . . . . . .         148,674         148,674
Other assets. . . . . . . . . . . . . . . . . . . . . . . .         468,253         518,944
                                                             ---------------  --------------
    Total assets. . . . . . . . . . . . . . . . . . . . . .  $   30,811,568   $  32,109,703
                                                             ===============  ==============

CURRENT LIABILITIES:
  Accounts payable. . . . . . . . . . . . . . . . . . . . .  $      807,647   $     739,284
  Accrued expenses. . . . . . . . . . . . . . . . . . . . .       1,108,266       1,297,370
  Refundable deposits . . . . . . . . . . . . . . . . . . .         434,299         534,295
  Dividends payable . . . . . . . . . . . . . . . . . . . .         365,459         314,530
                                                             ---------------  --------------
    Total current liabilities . . . . . . . . . . . . . . .       2,715,671       2,885,479
Deferred rent . . . . . . . . . . . . . . . . . . . . . . .       1,283,568       1,247,639
                                                             ---------------  --------------
    Total liabilities . . . . . . . . . . . . . . . . . . .       3,999,239       4,133,118
                                                             ---------------  --------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
Preferred stock, 10,000,000 shares authorized, none issued .              -               -
Common stock, $.01 par value; 40,000,000 shares authorized,
  8,305,892 and 7,863,251 shares issued and outstanding . .          83,059          78,632
Additional paid-in capital. . . . . . . . . . . . . . . . .      35,663,115      34,337,887
Note receivable . . . . . . . . . . . . . . . . . . . . . .        (786,818)              -
Deferred compensation . . . . . . . . . . . . . . . . . . .        (217,050)              -
Retained deficit. . . . . . . . . . . . . . . . . . . . . .      (7,929,977)     (6,439,934)
                                                             ---------------  --------------
    Total stockholders' equity. . . . . . . . . . . . . . .      26,812,329      27,976,585
                                                             ---------------  --------------
    Total liabilities and stockholders' equity. . . . . . .  $   30,811,568   $  32,109,703
                                                             ===============  ==============
</TABLE>

        The accompanying notes are an integral part of these statements.


                                        3
<PAGE>
<TABLE>
<CAPTION>
                                                  PYRAMID BREWERIES INC.

                                                 STATEMENTS OF OPERATIONS
                                                        (UNAUDITED)

                                               Three Months Ended September 30,      Nine Months Ended September 30,
                                                    2001               2000              2001               2000
                                              -----------------  ----------------  -----------------  ----------------
<S>                                           <C>                <C>               <C>                <C>
Gross sales  . . . . . . . . . . . . . . . .  $      8,428,921   $      8,148,329  $     24,373,234   $     23,096,158
Less excise taxes  . . . . . . . . . . . . .           403,796            445,845         1,128,390          1,307,588
                                              -----------------  ----------------  -----------------  ----------------
Net sales  . . . . . . . . . . . . . . . . .         8,025,125          7,702,484        23,244,844         21,788,570
Cost of sales  . . . . . . . . . . . . . . .         6,275,180          5,460,344        17,522,089         15,882,983
                                              -----------------  ----------------  -----------------  ----------------
Gross margin . . . . . . . . . . . . . . . .         1,749,945          2,242,140         5,722,755          5,905,587
Selling, general and administrative expenses         1,953,864          2,036,266         6,599,543          5,778,419
                                              -----------------  ----------------  -----------------  ----------------
Operating (loss) income. . . . . . . . . . .          (203,919)           205,874          (876,788)           127,168
Other income, net. . . . . . . . . . . . . .           200,496            159,308           463,596            471,160
                                              -----------------  ----------------  -----------------  ----------------
(Loss) income before income taxes. . . . . .            (3,423)           365,182          (413,192)           598,328
Provision for income taxes . . . . . . . . .                 -                  -                 -                  -
                                              -----------------  ----------------  -----------------  ----------------
Net (loss) income. . . . . . . . . . . . . .  $         (3,423)  $        365,182  $       (413,192)  $        598,328
                                              =================  ================  =================  ================

Basic net (loss) income per share. . . . . .  $          (0.00)  $           0.05  $          (0.05)  $           0.08
Weighted average basic shares outstanding. .         8,079,760          7,830,072         7,826,916          7,967,765
Diluted net (loss) income per share. . . . .  $          (0.00)  $           0.05  $          (0.05)  $           0.07
Weighted average diluted shares outstanding          8,079,760          7,884,702         7,826,916          7,981,275

  Beer barrels shipped . . . . . . . . . . .            27,800             28,200            81,700             81,700
  Soda barrels shipped . . . . . . . . . . .            12,600             10,800            37,500             30,300
                                              -----------------  ----------------  -----------------  ----------------
  Total barrels shipped. . . . . . . . . . .            40,400             39,000           119,200            112,000
                                              =================  ================  =================  ================
</TABLE>

        The accompanying notes are an integral part of these statements.


                                        4
<PAGE>
<TABLE>
<CAPTION>
                                      PYRAMID BREWERIES INC.

                                     STATEMENTS OF CASH FLOWS
                                            (UNAUDITED)

                                                                   Nine Months Ended September 30,
OPERATING ACTIVITIES:                                                     2001          2000
                                                                      ------------  ------------
<S>                                                                   <C>           <C>
  Net (loss) income. . . . . . . . . . . . . . . . . . . . . . . . .  $  (413,192)  $   598,328
  Adjustments to reconcile net (loss) income to net cash provided by
    operating activities:
    Depreciation and amortization. . . . . . . . . . . . . . . . . .    1,762,289     1,904,260
    Stock compensation . . . . . . . . . . . . . . . . . . . . . . .      214,159             -
    Loss on sales of fixed assets. . . . . . . . . . . . . . . . . .        1,028        58,725
    Deferred income taxes, net . . . . . . . . . . . . . . . . . . .            -       453,483
    Deferred rent. . . . . . . . . . . . . . . . . . . . . . . . . .       35,929       154,054
Changes in operating assets and liabilities:
    Accounts receivable. . . . . . . . . . . . . . . . . . . . . . .      294,110      (149,320)
    Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . .     (358,471)      (74,052)
    Prepaid expenses and other . . . . . . . . . . . . . . . . . . .     (211,752)     (320,081)
    Accounts payable and accrued expenses. . . . . . . . . . . . . .     (120,741)      390,720
    Refundable deposits. . . . . . . . . . . . . . . . . . . . . . .      (99,996)       24,619
                                                                      ------------  ------------
      Net cash provided by operating activities. . . . . . . . . . .    1,103,363     3,040,736
INVESTING ACTIVITIES:
    Acquisitions of fixed assets . . . . . . . . . . . . . . . . . .     (581,480)     (625,213)
    Proceeds from sales of fixed assets. . . . . . . . . . . . . . .       15,147       143,013
    Proceeds from long-term receivable . . . . . . . . . . . . . . .            -       185,820
                                                                      ------------  ------------
      Net cash used in investing activities. . . . . . . . . . . . .     (566,333)     (296,380)
FINANCING ACTIVITIES:
    Proceeds from the sale of common stock . . . . . . . . . . . . .      111,628        92,645
    Note receivable. . . . . . . . . . . . . . . . . . . . . . . . .     (109,921)            -
    Cash dividends paid. . . . . . . . . . . . . . . . . . . . . . .   (1,025,922)     (960,783)
    Repurchase and retirement of common stock. . . . . . . . . . . .            -      (773,560)
                                                                      ------------  ------------
      Net cash used in financing activities. . . . . . . . . . . . .   (1,024,215)   (1,641,698)
                                                                      ------------  ------------
(Decrease) increase in cash and cash equivalents . . . . . . . . . .     (487,185)    1,102,658
Cash and cash equivalents at beginning of period . . . . . . . . . .    6,444,145     6,303,540
                                                                      ------------  ------------
Cash and cash equivalents at end of period . . . . . . . . . . . . .  $ 5,956,960   $ 7,406,198
                                                                      ============  ============
</TABLE>

        The accompanying notes are an integral part of these statements.


                                        5
<PAGE>
                             PYRAMID BREWERIES INC.

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.   BASIS  OF  PRESENTATION:

     Pyramid  Breweries  Inc.  (the  "Company"),  a  Washington  corporation, is
engaged  in  the brewing, marketing and selling of craft beers and premium sodas
and  in  restaurant  operations.  The  Company  operates  breweries  in Seattle,
Washington  and  Berkeley,  California.  The  Company  sells  its beer through a
network of selected independent distributors primarily in Washington, Oregon and
California under the Pyramid and Thomas Kemper brands. Pyramid also manufactures
a  line  of  gourmet  sodas  under  the Thomas Kemper Soda Company label.  As of
September  30,  2001,  the  Company's products were distributed in 32 states and
Canada. The Company operates two restaurants adjacent to its breweries under the
Pyramid  Alehouse  brand  name.

     The  accompanying  condensed financial statements have been prepared by the
Company,  without  audit,  in  accordance  with  accounting principles generally
accepted  in the United States for interim financial information and pursuant to
the  rules  and regulations of the Securities and Exchange Commission.  With the
exception  of the historical information contained herein, the matters described
may  contain  forward-looking  statements  that involve risks and uncertainties,
including  those  described  under  the  caption  entitled  "Risk  Factors  and
Forward-Looking  Statements" in the Company's Annual Report on Form 10-K for the
year ended December 31, 2000, filed with the Securities and Exchange Commission,
and  elsewhere in the Company's periodic reports.  In the opinion of management,
the  accompanying  unaudited  financial  statements  contain  all  material
adjustments,  consisting  only of those of a normal recurring nature, considered
necessary  for  a fair presentation of the Company's financial position, results
of  operations  and  cash flows at the dates and for the periods presented.  The
operating  results  for  the  interim  periods  presented  are  not  necessarily
indicative  of  the  results  expected  for  the  full  year.

2.   INVENTORIES:

                                          SEPTEMBER 30,   DECEMBER 31,
                                             2001           2000
                                         --------------  -------------
        Raw materials. . . . . . . . .   $      587,342  $     481,601
        Work in process. . . . . . . .          160,314        109,510
        Finished goods . . . . . . . .          775,203        573,277
                                         --------------  -------------
                                         $    1,522,859  $   1,164,388
                                         ==============  =============

     Raw  materials  primarily  include  ingredients,  flavorings and packaging.
Work  in  process includes beer held in fermentation prior to the filtration and
packaging  process. Finished goods primarily include product ready for shipment,
as  well  as  promotional  merchandise  held  for  sale.

                                          SEPTEMBER 30,    DECEMBER 31,
                                              2001             2000
                                         ---------------  --------------
        Brewery and retail equipment. .  $   14,397,605   $  14,246,061
        Furniture and fixtures. . . . .         904,706         772,562
        Leasehold improvements. . . . .      13,744,788      13,563,615
        Construction in progress. . . .         227,476         165,555
        Assets held for sale. . . . . .           3,832           3,832
                                         ---------------  --------------
                                             29,278,407      28,751,625
        Less: accumulated depreciation.      (9,096,620)     (7,625,733)
                                         ---------------  --------------
                                         $   20,181,787   $  21,125,892
                                         ===============  ==============


                                        6
<PAGE>
4.   EARNINGS  PER  SHARE

     Basic  earnings  per share was computed by dividing net income available to
common  shareholders by weighted average shares outstanding. The effect of stock
options  has  not been included in the calculation of diluted net loss per share
for  the  quarter  and  nine  months  ended September 30, 2001, as the effect is
antidilutive.  Options  to purchase approximately 813,000 shares of common stock
were  outstanding  as of September 30, 2001. Options not included in the diluted
earnings  per  share  calculation because the exercise price of the options were
greater  than  the  average  market  price of the common shares were 555,000 and
975,000  for the quarter and nine months ended September 30, 2000, respectively.
Dilutive  earnings  per  share  was  calculated  as  follows:

<TABLE>
<CAPTION>
                                                  Three Months Ended       Nine Months Ended
                                                    September 30,            September 30,
                                                  2001         2000        2001         2000
                                               -----------  ----------  -----------  ----------
<S>                                            <C>          <C>         <C>          <C>
Earnings:
  Net (loss) income . . . . . . . . . . . . .  $   (3,423)  $  365,182  $ (413,192)  $  598,328

Shares:
  Weighted average basic shares outstanding .   8,079,760    7,830,072   7,826,916    7,967,765
  Stock option dilution . . . . . . . . . . .           -       54,630           -       13,510
                                               -----------  ----------  -----------  ----------
  Weighted average diluted shares outstanding   8,079,760    7,884,702   7,826,916    7,981,275
                                               -----------  ----------  -----------  ----------
    Diluted earnings per share. . . . . . . .  $    (0.00)  $     0.05  $    (0.05)  $     0.07
                                               ===========  ==========  ===========  ==========
</TABLE>

5.   STOCKHOLDERS'  EQUITY

<TABLE>
<CAPTION>
                                            COMMON STOCK      ADDITIONAL                 DEFERRED                    TOTAL
                                         ------------------    PAID-IN       NOTE         COMPEN-    RETAINED     STOCKHOLDERS'
                                          SHARES    AMOUNT     CAPITAL     RECEIVABLE     SATION      DEFICIT        EQUITY
                                         ---------  -------  -----------  ------------  ----------  ------------  ------------
<S>                                      <C>        <C>      <C>          <C>           <C>         <C>           <C>
Balance at December 31, 2000. . . . . .  7,863,251  $78,632  $34,337,887            -           -   $(6,439,934)  $27,976,585
  Net loss. . . . . . . . . . . . . . .          -        -            -            -           -      (413,192)     (413,192)
  Shares issued . . . . . . . . . . . .     26,941      269       52,861                        -             -        53,130
  Exercised stock options . . . . . . .    415,700    4,158      841,158     (786,818)          -             -        58,498
  Stock compensation including
     amortization of stock compensation          -        -      184,985            -      29,174             -       214,159
  Deferred compensation . . . . . . . .          -        -      246,224            -    (246,224)            -             -
  Dividends declared. . . . . . . . . .          -        -            -            -           -    (1,076,851)   (1,076,851)
                                         ---------  -------  -----------  ------------  ----------  ------------  ------------
Balance at September 30, 2001 . . . . .  8,305,892  $83,059  $35,663,115  $  (786,818)  $(217,050)  $(7,929,977)  $26,812,329
                                         =========  =======  ===========  ============  ==========  ============  ============
</TABLE>

6.   COMMITMENTS  AND  CONTINGENCIES:

     The  Company  is  involved  from  time  to  time in claims, proceedings and
litigation  arising  in  the  ordinary  course of business. The Company does not
believe  that  any  such claim, proceeding or litigation, either alone or in the
aggregate,  will  have  a  material  adverse  effect  on the Company's financial
position  or  results  of  operations.

7.   CASH  DIVIDEND:

     The  Board  of Directors announced on August 21, 2001, the declaration of a
$0.044  per common share dividend payable on October 12, 2001 to shareholders of
record  on September 28, 2001. The cash dividends declared totaled approximately
$365,000  for  all  common  stock  outstanding  as  of  the  date  of  record.

8.   SEGMENT  INFORMATION:

     The  Company  follows  the  provisions of Statement of Financial Accounting
Standards  (SFAS)  No.  131,  "Disclosures  about  Segments of an Enterprise and
Related  Information,"  and  reports  segment  information in the same format as
reviewed  by  the Company's management, which is organized around differences in
products  and  services.


                                        7
<PAGE>
     Products  and  Services

     The  Company's  reportable  segments  include  beverage  operations  and
alehouses.  Beverage operations include the production and sale of Pyramid Ales,
Thomas  Kemper  beers  and  Thomas  Kemper  Soda  Company products. The alehouse
segment  consists  of two full-service alehouses, which market and sell the full
line  of  the  Company's  beer  and  soda  products  as well as food and certain
merchandise.

     Factors  used  to  identify  reportable  segments

     The  Company's  reportable segments are strategic business units that offer
different  products  and services. These segments are managed separately because
each  business  requires  different  management  and  marketing  strategies.

     Measurement  of  segment  profit  and  segment  assets

     The  accounting policies of the segments are the same as those described in
the  summary  of  significant  accounting  policies.  The  Company  evaluates
performance  based  on  profit  or  loss from operations before income taxes not
including  nonrecurring gains and losses. The Company records intersegment sales
at  cost.


                                        8
<PAGE>
<TABLE>
<CAPTION>
Segment  profit  and  segment  assets  are  as  follows:

                                               BEVERAGE
                                              OPERATIONS    ALEHOUSE    OTHER      TOTAL
                                              -----------  ----------  --------  ---------
                                                        (DOLLARS IN THOUSANDS)
<S>                                           <C>          <C>         <C>       <C>
QUARTER ENDED SEPTEMBER 30, 2001
    Revenues from external customers . . . .  $     5,989  $   2,440   $     -   $  8,429
    Intersegment revenues. . . . . . . . . .           89        (89)        -          -
    Interest income. . . . . . . . . . . . .            -          -        71         71
    Depreciation and amortization including
       stock compensation. . . . . . . . . .          448        104        63        615
    Operating income (loss). . . . . . . . .           33        272      (509)      (204)
    Capital expenditures . . . . . . . . . .           57         19        75        151
    Total assets . . . . . . . . . . . . . .       16,343      3,128    11,341     30,812

QUARTER ENDED SEPTEMBER 30, 2000
    Revenues from external customers . . . .  $     5,919  $   2,229   $     -   $  8,148
    Intersegment revenues. . . . . . . . . .           77        (77)        -          -
    Interest income. . . . . . . . . . . . .            -          -       118        118
    Depreciation and amortization including
       stock compensation. . . . . . . . . .          498        106        37        641
    Operating income (loss). . . . . . . . .          395        374      (563)       206
    Capital expenditures . . . . . . . . . .          171         40        18        229
    Total assets . . . . . . . . . . . . . .       18,671      3,524    11,070     33,265

NINE MONTHS ENDED SEPTEMBER 30, 2001
    Revenues from external customers . . . .  $    17,801  $   6,572   $     -   $ 24,373
    Intersegment revenues. . . . . . . . . .          228       (228)        -          -
    Interest income. . . . . . . . . . . . .            -          -       231        231
    Depreciation and amortization including
       stock compensation. . . . . . . . . .        1,350        310       316      1,976
    Operating income (loss). . . . . . . . .          449        768    (2,094)      (877)
    Capital expenditures . . . . . . . . . .          268        118       195        581
    Total assets . . . . . . . . . . . . . .       16,343      3,128    11,341     30,812

NINE MONTHS ENDED SEPTEMBER 30, 2000
    Revenues from external customers . . . .  $    17,102  $   5,994   $     -   $ 23,096
    Intersegment revenues. . . . . . . . . .          207       (207)        -          -
    Interest income. . . . . . . . . . . . .            -          -       298        298
    Depreciation and amortization including
       stock compensation. . . . . . . . . .        1,438        311       155      1,904
    Operating income (loss). . . . . . . . .        1,355        592    (1,820)       127
    Capital expenditures . . . . . . . . . .          275        268        82        625
    Total assets . . . . . . . . . . . . . .       18,671      3,524    11,070     33,265
</TABLE>

Other

     Other  consists  of  interest  income, general and administrative expenses,
corporate  office  assets  and other reconciling items that are not allocated to
segments  for  internal  management reporting purposes. Total assets include all
assets  except  for  fixed  assets,  which  are  presented  by  segment.

9.   NEW  ACCOUNTING  PRONOUNCEMENTS:

     In  June  2001  the  Financial Accounting Standards Board approved SFAS No.
141,  "Business  Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets."  SFAS No. 141 prospectively prohibits the pooling of interest method of
accounting for business combinations initiated after June 30, 2001. SFAS No. 142
requires  companies  to cease amortizing goodwill that existed at June 30, 2001.
The annual amortization of existing goodwill of approximately $80,000 will cease
on  December  31, 2001. Any goodwill resulting from acquisitions completed after
June  30, 2001 will not be amortized. SFAS No. 142 also establishes a new method
of  testing goodwill for impairment on an annual basis or on an interim basis if
an  event  occurs or circumstances change that would more likely than not reduce
the  fair  value  of  a reporting unit below its carrying value. The adoption of


                                        9
<PAGE>
SFAS No. 142 will result in the Company's discontinuation of amortization of its
goodwill;  however,  the  Company  will  be  required  to  test its goodwill for
impairment  under the new standard beginning in the first quarter of 2002, which
could have an adverse effect on the Company's future results of operations if an
impairment  occurs.


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

RESULTS  OF  OPERATIONS

     The following table sets forth, for the periods indicated, certain selected
unaudited  operating  data,  expressed  as  a  percentage  of  net  sales.


<TABLE>
<CAPTION>
SELECTED  UNAUDITED  OPERATING  DATA

                                                          QUARTER ENDED SEPTEMBER 30,
                                                          ---------------------------
                                                              % OF                    % OF
                                                 2001       NET SALES      2000     NET SALES
                                              -----------  -----------  ----------  ---------
<S>                                           <C>          <C>          <C>         <C>
Gross sales. . . . . . . . . . . . . . . . .  $8,428,921                $8,148,329
Less excise taxes. . . . . . . . . . . . . .     403,796                   445,845
                                              -----------  -----------  ----------  ---------
Net sales. . . . . . . . . . . . . . . . . .   8,025,125        100.0    7,702,484      100.0
Cost of sales. . . . . . . . . . . . . . . .   6,275,180         78.2    5,460,344       70.9
                                              -----------  -----------  ----------  ---------
Gross margin . . . . . . . . . . . . . . . .   1,749,945         21.8    2,242,140       29.1
Selling, general and administrative expenses   1,953,864         24.3    2,036,266       26.4
                                              -----------  -----------  ----------  ---------
Operating (loss) income. . . . . . . . . . .    (203,919)        (2.5)     205,874        2.7
Other income, net. . . . . . . . . . . . . .     200,496          2.5      159,308        2.0
                                              -----------  -----------  ----------  ---------
(Loss) income before income taxes. . . . . .      (3,423)        (0.0)     365,182        4.7
Provision for  income taxes. . . . . . . . .           -            -            -          -
                                              -----------  -----------  ----------  ---------
Net (loss) income. . . . . . . . . . . . . .  $   (3,423)        (0.0)  $  365,182        4.7
                                              ===========  ===========  ==========  =========

Basic net (loss) income per share. . . . . .  $    (0.00)               $     0.05
                                              ===========               ==========
Weighted average basic shares outstanding. .   8,079,760                 7,830,072
                                              ===========               ==========
Diluted net (loss) income per share. . . . .  $    (0.00)               $     0.05
                                              ===========               ==========
Weighted average diluted shares outstanding.   8,079,760                 7,884,702
                                              ===========               ==========

OPERATING DATA (IN BARRELS):
  Beer barrels shipped . . . . . . . . . . .      27,800                    28,200
  Soda barrels shipped . . . . . . . . . . .      12,600                    10,800
                                              -----------               ----------
  Total barrels shipped. . . . . . . . . . .      40,400                    39,000
                                              ===========               ==========
  Annual production capacity at period end .     200,000                   172,000
                                              ===========               ==========
</TABLE>


                                       10
<PAGE>
<TABLE>
<CAPTION>
                                                          NINE MONTHS ENDED SEPTEMBER 30,
                                                          -------------------------------
                                                                % OF                     % OF
                                                  2001       NET SALES       2000      NET SALES
                                              ------------  ------------  -----------  ---------
<S>                                           <C>           <C>           <C>          <C>
Gross sales. . . . . . . . . . . . . . . . .  $24,373,234                 $23,096,158
Less excise taxes. . . . . . . . . . . . . .    1,128,390                   1,307,588
                                              ------------  ------------  -----------  ---------
Net sales. . . . . . . . . . . . . . . . . .   23,244,844         100.0    21,788,570      100.0
Cost of sales. . . . . . . . . . . . . . . .   17,522,089          75.4    15,882,983       72.9
                                              ------------  ------------  -----------  ---------
Gross margin . . . . . . . . . . . . . . . .    5,722,755          24.6     5,905,587       27.1
Selling, general and administrative expenses    6,599,543          28.4     5,778,419       26.5
                                              ------------  ------------  -----------  ---------
Operating (loss) income. . . . . . . . . . .     (876,788)         (3.8)      127,168        0.6
Other income, net. . . . . . . . . . . . . .      463,596           2.0       471,160        2.1
                                              ------------  ------------  -----------  ---------
(Loss) income before income taxes. . . . . .     (413,192)         (1.8)      598,328        2.7
Provision for  income taxes. . . . . . . . .            -             -             -          -
                                              ------------  ------------  -----------  ---------
Net (loss) income. . . . . . . . . . . . . .  $  (413,192)         (1.8)  $   598,328        2.7
                                              ============  ============  ===========  =========

Basic net (loss) income per share. . . . . .  $     (0.05)                $      0.08
                                              ============                ===========
Weighted average basic shares outstanding. .    7,826,916                   7,967,765
                                              ============                ===========
Diluted net (loss) income per share. . . . .  $     (0.05)                $      0.07
                                              ============                ===========
Weighted average diluted shares outstanding.    7,826,916                   7,981,275
                                              ============                ===========

OPERATING DATA (IN BARRELS):
  Beer barrels shipped . . . . . . . . . . .       81,700                      81,700
  Soda barrels shipped . . . . . . . . . . .       37,500                      30,300
                                              ------------                -----------
  Total barrels shipped. . . . . . . . . . .      119,200                     112,000
                                              ============                ===========
  Annual production capacity at period end .      200,000                     172,000
                                              ============                ===========
</TABLE>

QUARTER  ENDED  SEPTEMBER  30, 2001 COMPARED TO QUARTER ENDED SEPTEMBER 30, 2000

     Gross Sales. Gross sales increased 3.4% to $8,429,000 for the third quarter
ended  September 30, 2001 from $8,148,000 in the same quarter of the prior year.
This  increase  in gross sales was mainly the result of increased wholesale soda
and  alehouse  sales,  while  craft beer sales declined very slightly. Wholesale
beverage  sales  increased  1.2% to $5,989,000 in the third quarter of 2001 from
$5,919,000  in  the  same quarter of 2000.  This increase was primarily due to a
16.7%  increase  in  Thomas  Kemper  Soda barrel shipments to 12,600 from 10,800
barrels  in the same quarter of the prior year. Alehouse sales increased 9.5% to
$2,440,000  in  the third quarter of 2001 from $2,229,000 in the same quarter of
2000.  Total  wholesale  beer shipments were down slightly to 27,800 barrels for
the  third  quarter  of  2001  from 28,200 barrels the same quarter of the prior
year.  Of  total  beer  shipments, Pyramid beer increased 0.8% to 26,400 barrels
while  Thomas  Kemper  beer  shipments  decreased 30.4% to 1,400 barrels for the
third  quarter  of 2001 compared to the same quarter of the prior year. The beer
product  mix  shifted  to  a  higher  percentage of draft sales to 43.1% for the
quarter  ended  September  30, 2001 from 38.6% for the same quarter of the prior
year.

     Excise  Taxes.  Excise taxes decreased to 4.8% of gross sales for the third
quarter ended September 30, 2001 from 5.5% of gross sales in the same quarter of
the  prior year. The decrease in excise taxes as a percentage of gross sales was
due  mainly  to  a greater portion of soda and alehouse sales during the quarter
ended  September  30,  2001,  which  do  not  bear  excise  tax.

     Gross  Margin.  Gross  margin  decreased  21.9% to $1,750,000 for the third
quarter  ended  September  30,  2001  from $2,242,000 in the same quarter of the
prior year. Gross margin as a percentage of net sales decreased to 21.8% for the
third  quarter  ended  September 30, 2001 from 29.1% for the same quarter of the
prior  year.  This  decrease  as  a percentage of net sales was due primarily to
increased utility and material costs in the brewery division and increased prime
costs  and  general  operating  costs  in  the  alehouse  division.

     Selling,  General  and  Administrative  Expenses.  Selling,  general  and
administrative  expenses  decreased  4.0%  to $1,954,000 from $2,036,000 for the
quarters  ended  September 30, 2001 and 2000, respectively. Selling, general and
administrative  expenses as a percent of net sales decreased to 24.3% from 26.4%
for  the  same  quarter  of  the  prior year. This decrease was due primarily to
decreased  advertising  and  administrative  expense during the current quarter.

     Other  Income,  net. Other income increased 25.8% to $200,000 for the third
quarter  ended  September  30,  2001  from $159,000 for the third quarter of the
prior  year  due  to  losses  on  sales  of  assets  during  the  prior  year.

     Income  Taxes.  The Company recorded no income tax benefit or provision for
the  quarters  ended  September  30, 2001 and 2000. As of December 31, 2000, the
Company  had  deferred tax assets arising from deductible temporary differences,
tax  losses,  and tax credits offset against certain deferred tax liabilities. A


                                       11
<PAGE>
valuation allowance was recorded against the deferred tax asset for the benefits
of  tax  losses which may not be realized. Realization of the deferred tax asset
representing  tax  loss  and  credit carryforwards is dependent on the Company's
ability  to  generate  future  U.S. taxable income. The Company will continue to
evaluate the realizability of the deferred tax assets quarterly by assessing the
need  for  and  amount  of  a  valuation  allowance.

     Net  Income. The Company reported a $368,000 decrease in net income for the
quarter  ended September 30, 2001 to a net loss of $3,000 compared to net income
of  $365,000  reported  for the third quarter of the prior year. The decrease in
net income was due mainly to increased operating expenses for both divisions for
the  third  quarter  ended  September  30,  2001.

NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
2000

     Gross  Sales.  Gross sales increased 5.5% to $24,373,000 for the nine month
period  ended  September 30, 2001 from $23,096,000 in the same nine month period
of  the  prior  year.  This  increase  in  gross  sales was mainly the result of
increased  wholesale soda and alehouse sales. Wholesale beverage sales increased
4.1%  to  $17,801,000  in  the  nine  month period ended September 30, 2001 from
$17,102,000  in  the  same  period  of  2000.  This  increase was due to a 23.8%
increase  in  Thomas  Kemper  Soda barrels shipped to 37,500 barrels from 30,300
barrels  in  the  same  nine  month  period  of  the  prior year. Alehouse sales
increased 9.7% to $6,572,000 from $5,994,000 for nine months ended September 30,
2001 and 2000, respectively, due to increased sales prices and patronage at both
alehouse  restaurants.  Wholesale beer shipments remained flat at 81,700 barrels
for  the  first  nine  months  of 2001 and the same period of the prior year. Of
wholesale  beer  shipments,  Pyramid beer increased 2.2% to 77,000 barrels while
Thomas Kemper beer shipments decreased 26.7% to 4,600 barrels for the first nine
months  of  2001 compared to the same period of the prior year. The beer product
mix shifted to a slightly higher percentage of draft sales to 41.8% for the nine
months  ended  September  30, 2001 versus 40.1% for the same period of the prior
year.

     Excise  Taxes.  Excise  taxes decreased to 4.6% of gross sales for the nine
month period ended September 30, 2001 from 5.7% of gross sales for the same nine
month  period of the prior year. The decrease in excise taxes as a percentage of
gross  sales  was  due  mainly  to  a greater portion of soda and alehouse sales
during  the nine month period ended September 30, 2001, which do not bear excise
tax.

     Gross  Margin. Gross margin decreased 3.1% to $5,723,000 for the nine month
period ended September 30, 2001 from $5,906,000 for the same period of the prior
year.  Gross margin as a percentage of net sales decreased to 24.6% for the nine
month  period  ended  September  30,  2001 from 27.1% for the same period of the
prior  year.  This  decrease  as  a percentage of net sales was due primarily to
increased  material and utility costs and a shift in product mix with increasing
sales  of  12-pack  products  in  the  beverage  division.

     Selling,  General  and  Administrative  Expenses.  Selling,  general  and
administrative  expenses increased 14.2% to $6,600,000 for the nine month period
ended  September 30, 2001 from $5,778,000 for the same period of the prior year.
Selling,  general  and  administrative  expenses  as a percent of net sales also
increased  to  28.4%  from  26.5%  for  the  same period of the prior year. This
increase was due primarily to increased advertising expense, selling expense and
a  non-cash  stock  compensation  charge  of  $210,000 related to the new equity
arrangement  with  the  Company's  CEO  announced in the second quarter of 2001.
Non-recurring  excise  tax refunds of $150,000 were also recorded as a reduction
in general and administrative expenses during the same period of the prior year.

     Other  Income,  net.  Other income decreased to $464,000 for the nine month
period  ended September 30, 2001 from $471,000 for the same nine month period of
the  prior  year.  The  decrease  was  due  primarily  to lower interest income.

     Income  Taxes.  The  Company  recorded no income tax provision for the nine
month  periods  ended  September 30, 2001 and 2000. As of December 31, 2000, the
Company  had  deferred tax assets arising from deductible temporary differences,
tax  losses,  and tax credits offset against certain deferred tax liabilities. A
valuation allowance was recorded against the deferred tax asset for the benefits
of  tax  losses which may not be realized. Realization of the deferred tax asset
representing  tax  loss  and  credit carryforwards is dependent on the Company's
ability  to  generate  future  U.S. taxable income. The Company will continue to
evaluate the realizability of the deferred tax assets quarterly by assessing the
need  for  and  amount  of  a  valuation  allowance.

     Net  Income.  The  net income for the nine month period ended September 30,
2001  decreased  to  a  net loss of $413,000, compared to net income of $598,000
reported  for  the same period of the prior year. The decrease in net income was
due  mainly  to  higher  brewery  operating  costs  and  selling,  general  and
administrative  expenses  mentioned  above.

LIQUIDITY  AND  CAPITAL  RESOURCES

     Net  cash  provided  by  operating  activities during the nine month period
ended  September  30,  2001  was  $1,103,000 compared to $3,041,000 for the same
period of the prior year. This decrease was due primarily to the decrease in net
income  for  the  current  period and cash collected from tax refunds related to
deferred  tax assets from the prior year.  Net cash used in investing activities
for  the  nine months ended September 30, 2001 was $566,000 compared to net cash
used  in investing activities of $296,000 for the same period of the prior year.


                                       12
<PAGE>
The  cash used in investing activities in 2001 included funds used to expand the
Seattle  alehouse  and  install production equipment in the Berkeley brewery. At
September  30,  2001,  the Company had working capital of $7,187,000 compared to
$7,431,000  at  December  31,  2000.

     On  December  15,  1999,  the  Company  announced  a  stock buyback plan to
repurchase  up  to $2,000,000 of the Company's common stock from time to time on
the  open  market.  Stock  repurchases  are  at the discretion of management and
depend,  among  other  things,  on  the Company's results of operations, capital
requirements and financial condition, and on such other factors as the Company's
management  may  consider  relevant.  As  of September 30, 2001, the Company has
repurchased  445,998  shares  at  an  average  cost  per  share  of  $1.93.

     The  Company  had  a  $5,000,000  line  of  credit (the Line of Credit) for
short-term operating needs which expired on July 31, 2001. The Company had never
borrowed  on  the  Line  of  Credit.

     In  October 2001, the Company entered into an agreement to purchase certain
assets  of  Fault Line Brewery Company for $285,000 and to lease the facility at
the Walnut Creek location. The Company will incur additional expenditures on the
location  for  leasehold  improvements  in  preparation for a first quarter 2002
opening.

     Future  capital requirements may vary depending on such factors as the cost
of  acquisition  of  businesses,  brands  and  real  estate costs in the markets
selected  for  future expansion, whether such real estate is leased or purchased
and  the  extent  of  improvements  necessary.  Capital expenditures in 2001 are
expected to be comparable to the 2000 expenditures. Planned projects include the
continued  upgrading of brewery equipment and alehouse facilities in the Seattle
and  Berkeley  locations.  While  there  can  be  no  assurance  that  current
expectations  will  be  realized  and  plans  are subject to change upon further
review,  the  Company  believes  that its cash reserves, together with cash from
operations,  will  be  sufficient  for  the  Company's  working  capital  needs.

     The  Company's  future  cash  requirements  and  cash flow expectations are
closely  related  to  its expansion plans. The Company generally expects to meet
future  financing  needs through cash on-hand, cash flow from operations and, to
the  extent  required  and  available,  additional  bank  borrowings.

RISK  FACTORS  AND  FORWARD  LOOKING  STATEMENTS

     The  Company  does  not  provide forecasts of future financial performance.
However  this  report does contain forward-looking statements within the meaning
of  Section 21E of the Securities Exchange Act of 1934, which are subject to the
"safe  harbor"  created  by  that section.  There are numerous important factors
that  could cause results to differ materially from those anticipated by some of
the  statements  made  by  the  Company.  Investors  are  cautioned  that  all
forward-looking  statements  involve  a  high  degree  of  risk and uncertainty.
Additional  information  concerning  those and other factors is contained in the
Company's Securities and Exchange Commission filings including its Form 10-K for
the  year  ended  December  31,  2000.

PART  II.  --  OTHER  INFORMATION

ITEM  6.  EXHIBITS  AND  REPORTS  ON  FORM  8-K

(A)  EXHIBITS

     The  following  exhibits  are  filed  as  part  of  this  report.
     3.1*     Amended  and  Restated  Articles  of  Incorporation
     3.2*     Amended  and  Restated  Bylaws
     *Incorporated  by  reference to the exhibits filed as part of the Company's
      Registration  Statement  on  Form  S-1  (File  No.  33-97834).

(B)  REPORTS  ON  FORM  8-K

     None  filed  during  the  quarter  ended  September  30,  2001.

     ITEMS  1, 2, 3, 4 AND 5 OF PART II ARE NOT APPLICABLE AND HAVE BEEN OMITTED


                                       13
<PAGE>
                                    SIGNATURE

Pursuant  to  the requirements of Section 13 or 15(d) 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, in the City of Seattle,
State  of  Washington,  on  November  14,  2001.


                                 PYRAMID  BREWERIES  INC.


                                 By:  /s/  L.  WAYNE  DRURY
                                    -----------------------------------
                                    L. Wayne Drury, Vice President
                                    and Chief Financial Officer

                                 By:  /s/  R.  MARTIN  KELLY
                                    -----------------------------------
                                    R. Martin Kelly, President
                                    and Chief Executive Officer

DATE:  November 14, 2001


                                       14
<PAGE>