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, 2002

                Commission file number:  0-29274


           AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
(Exact Name of Small Business Issuer as Specified in its Charter)


      State of Minnesota                   41-1789725
(State or other Jurisdiction of         (I.R.S. Employer
Incorporation or Organization)        Identification No.)


  1300 Minnesota World Trade Center, St. Paul, Minnesota 55101
            (Address of Principal Executive Offices)

                          (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 Securities Exchange  Act  of
1934  during the preceding 12 months (or for such shorter  period
that  the registrant was required to file such reports), and  (2)
has  been  subject to such filing requirements for  the  past  90
days.

                         Yes  [X]   No

         Transitional Small Business Disclosure Format:

                         Yes        No  [X]




        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP


                              INDEX




PART I. Financial Information

 Item 1. Balance Sheet as of June 30, 2002 and December 31, 2001

         Statements for the Periods ended June 30, 2002 and 2001:

           Income

           Cash Flows

           Changes in Partners' Capital

         Notes to Financial Statements

 Item 2. Management's Discussion and Analysis

PART II. Other Information

 Item 1. Legal Proceedings

 Item 2. Changes in Securities

 Item 3. Defaults Upon Senior Securities

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

 Item 5. Other Information

 Item 6. Exhibits and Reports on Form 8-K

<PAGE>
        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP

                          BALANCE SHEET

               JUNE 30, 2002 AND DECEMBER 31, 2001

                           (Unaudited)

                             ASSETS

                                                    2002           2001

CURRENT ASSETS:
  Cash and Cash Equivalents                     $ 3,003,149    $ 4,460,840
  Receivables                                             0          9,567
                                                 -----------    -----------
      Total Current Assets                        3,003,149      4,470,407
                                                 -----------    -----------
INVESTMENTS IN REAL ESTATE:
  Land                                            5,318,172      4,976,315
  Buildings and Equipment                        11,522,137      9,175,172
  Accumulated Depreciation                       (1,424,462)    (1,418,203)
                                                 -----------    -----------
                                                 15,415,847     12,733,284
  Real Estate Held for Sale                               0        846,124
                                                 -----------    -----------
      Net Investments in Real Estate             15,415,847     13,579,408
                                                 -----------    -----------
          Total Assets                          $18,418,996    $18,049,815
                                                 ===========    ===========


                       LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
  Payable to AEI Fund Management, Inc.          $    52,682    $    37,491
  Distributions Payable                             405,719        405,719
  Unearned Rent                                      84,045              0
                                                 -----------    -----------
      Total Current Liabilities                     542,446        443,210
                                                 -----------    -----------
PARTNERS' CAPITAL:
  General Partners                                   16,631         13,932
  Limited Partners, $1,000 Unit Value;
   24,000 Units authorized and issued;
   23,235 Units outstanding                      17,859,919     17,592,673
                                                 -----------    -----------
      Total Partners' Capital                    17,876,550     17,606,605
                                                 -----------    -----------
        Total Liabilities and Partners' Capital $18,418,996    $18,049,815
                                                 ===========    ===========


 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
</PAGE>
<PAGE>
        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP

                       STATEMENT OF INCOME

                  FOR THE PERIODS ENDED JUNE 30

                           (Unaudited)


                               Three Months Ended        Six Months Ended
                             6/30/02       6/30/01     6/30/02      6/30/01

INCOME:
   Rent                     $ 378,239    $ 490,012   $  761,831   $  946,807
   Investment Income           21,302       13,059       39,407       40,843
                             ---------    ---------   ----------   ----------
        Total Income          399,541      503,071      801,238      987,650
                             ---------    ---------   ----------   ----------

EXPENSES:
   Partnership Administration -
     Affiliates                64,102       71,750      144,499      137,724
   Partnership Administration
     and Property Management -
     Unrelated Parties         22,092        6,452       37,332       13,461
   Depreciation                92,954      125,927      191,775      245,184
                             ---------    ---------   ----------   ----------
        Total Expenses        179,148      204,129      373,606      396,369
                             ---------    ---------   ----------   ----------

OPERATING INCOME              220,393      298,942      427,632      591,281

GAIN ON SALE OF REAL ESTATE   337,582      209,232      660,488      450,620
                             ---------    ---------   ----------   ----------
NET INCOME                  $ 557,975    $ 508,174   $1,088,120   $1,041,901
                             =========    =========   ==========   ==========

NET INCOME ALLOCATED:
   General Partners         $   5,580    $  17,082   $   10,881   $   22,419
   Limited Partners           552,395      491,092    1,077,239    1,019,482
                             ---------    ---------   ----------   ----------
                            $ 557,975    $ 508,174   $1,088,120   $1,041,901
                             =========    =========   ==========   ==========

NET INCOME PER
 LIMITED PARTNERSHIP UNIT
 (23,235 and 23,322
 weighted average Units
 outstanding in 2002 and
 2001, respectively)        $   23.77    $   21.05   $    46.36   $    43.71
                             =========    =========   ==========   ==========


 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
</PAGE>
<PAGE
        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP

                     STATEMENT OF CASH FLOWS

                  FOR THE PERIODS ENDED JUNE 30

                           (Unaudited)

                                                       2002           2001

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net  Income                                     $ 1,088,120    $ 1,041,901

   Adjustments to Reconcile Net Income to Net Cash
   Provided by Operating Activities:
     Depreciation                                      191,775        245,184
     Gain on Sale of Real Estate                      (660,488)      (450,620)
     (Increase) Decrease in Receivables                  9,567        (19,301)
     Increase (Decrease) in Payable to
        AEI Fund Management, Inc.                       15,191        (22,514)
     Increase in Unearned Rent                          84,045         87,600
                                                    -----------    -----------
        Total Adjustments                             (359,910)      (159,651)
                                                    -----------    -----------
        Net Cash Provided By
        Operating Activities                           728,210        882,250
                                                    -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Investments in Real Estate                       (4,131,554)    (2,051,958)
   Proceeds from Sale of Real Estate                 2,763,828      1,482,939
   Payments Received on Short-Term Note Receivable           0        675,920
                                                    -----------    -----------
        Net Cash Provided By (Used For)
          Investing Activities                      (1,367,726)       106,901
                                                    -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Increase in Distributions Payable                         0         15,025
   Distributions to Partners                          (818,175)      (803,024)
                                                    -----------    -----------
        Net Cash Used For
        Financing Activities                          (818,175)      (787,999)
                                                    -----------    -----------
NET INCREASE (DECREASE) IN CASH
      AND CASH EQUIVALENTS                          (1,457,691)       201,152

CASH AND CASH EQUIVALENTS, beginning of period       4,460,840      1,388,156
                                                    -----------    -----------
CASH AND CASH EQUIVALENTS, end of period           $ 3,003,149    $ 1,589,308
                                                    ===========    ===========


 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
</PAGE>
<PAGE>
        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP

            STATEMENT OF CHANGES IN PARTNERS' CAPITAL

                  FOR THE PERIODS ENDED JUNE 30

                           (Unaudited)

                                                                   Limited
                                                                 Partnership
                             General      Limited                   Units
                             Partners     Partners     Total     Outstanding


BALANCE, December 31, 2000  $(38,243)   $17,132,557  $17,094,314   23,322.18

  Distributions               (8,030)      (794,994)    (803,024)

  Net Income                  22,419      1,019,482    1,041,901
                             --------    -----------  -----------  ----------
BALANCE, June 30, 2001      $(23,854)   $17,357,045  $17,333,191   23,322.18
                             ========    ===========  ===========  ==========


BALANCE, December 31, 2001  $ 13,932    $17,592,673  $17,606,605   23,235.35

  Distributions               (8,182)      (809,993)    (818,175)

  Net Income                  10,881      1,077,239    1,088,120
                             -------     -----------  -----------  ----------
BALANCE, June 30, 2002      $16,631     $17,859,919  $17,876,550   23,235.35
                             =======     ===========  ===========  ==========


 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
</PAGE>
<PAGE>
        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS

                          JUNE 30, 2002

                           (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   Income   &   Growth   Fund  XXI  Limited   Partnership
     (Partnership)  was  formed to acquire and  lease  commercial
     properties   to   operating  tenants.    The   Partnership's
     operations  are  managed by AEI Fund  Management  XXI,  Inc.
     (AFM), the Managing General Partner.  Robert P. Johnson, the
     President  and  sole  shareholder  of  AFM,  serves  as  the
     Individual General Partner and an affiliate of AFM, AEI Fund
     Management,  Inc.  (AEI), performs  the  administrative  and
     operating functions for the Partnership.

     The   terms   of  the  Partnership  offering  call   for   a
     subscription  price of $1,000 per Limited Partnership  Unit,
     payable   on  acceptance  of  the  offer.   The  Partnership
     commenced   operations  on  April  14,  1995  when   minimum
     subscriptions    of   1,500   Limited   Partnership    Units
     ($1,500,000)  were  accepted.   On  January  31,  1997,  the
     offering  terminated when the maximum subscription limit  of
     24,000  Limited  Partnership Units was reached.   Under  the
     terms  of  the  Limited Partnership Agreement,  the  Limited
     Partners   and   General  Partners  contributed   funds   of
     $24,000,000 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 INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS

                          JUNE 30, 2002
                           (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
     10%  of  their  Adjusted  Capital  Contribution  per  annum,
     cumulative  but not compounded, to the extent not previously
     distributed  from Net Cash Flow; (ii) any remaining  balance
     will  be distributed 90% to the Limited Partners and 10%  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 in  the
     same  ratio  as  the  last  dollar  of  Net  Cash  Flow   is
     distributed.   Net losses from operations will be  allocated
     99% to the Limited Partners and 1% 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 10% of their Adjusted Capital Contributions
     per  annum, cumulative but not compounded, to the extent not
     previously  allocated;  (iii)  third,  the  balance  of  any
     remaining  gain  will then be allocated 90% to  the  Limited
     Partners  and 10% to the General Partners.  Losses  will  be
     allocated 98% to the Limited Partners and 2% to the  General
     Partners.

     The  General Partners are not required to currently  fund  a
     deficit   capital   balance.   Upon   liquidation   of   the
     Partnership or withdrawal by a General Partner, the  General
     Partners will contribute to the Partnership an amount  equal
     to  the  lesser  of  the deficit balances in  their  capital
     accounts  or  1%  of  total Limited  Partners'  and  General
     Partners' capital contributions.

(3)  Short-Term Note Receivable -

     On  August 2, 2000, the Partnership received a Contract  for
     Deed  from an affiliate of the buyer of the Media Play store
     in  Apple Valley, Minnesota.  The Note bore interest  at  9%
     and was secured by the land, building and equipment.  As  of
     December  31,  2000, the Partnership's share of  outstanding
     principal  due  on the Note was $675,920.   On  January  16,
     2001, the Partnership received the outstanding principal and
     accrued interest on the Note.

        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS

                          JUNE 30, 2002
                           (Continued)

(4)  Investments in Real Estate -

     Through December 31, 2001, the Partnership sold its interest
     in  the  Champps Americana restaurant in Columbus, Ohio,  in
     eleven  separate transactions, to unrelated  third  parties.
     The   Partnership  received  total  net  sale  proceeds   of
     $2,295,174, which resulted in a total net gain of  $631,607.
     The  total cost and related accumulated depreciation of  the
     interests  sold  was $1,808,880 and $145,313,  respectively.
     For  the  six months ended June 30, 2001, the net  gain  was
     $289,679.

     Through June 30, 2002, the Partnership sold its interest  in
     the Champps Americana restaurant in Schaumburg, Illinois, in
     thirteen  separate transactions, to unrelated third parties.
     The   Partnership  received  total  net  sale  proceeds   of
     $2,892,414, which resulted in a total net gain of  $838,268.
     The  total cost and related accumulated depreciation of  the
     interests  sold  was $2,256,461 and $202,315,  respectively.
     For  the  six months ended June 30, 2002 and 2001,  the  net
     gain was $16,738 and $160,941, respectively.

     Through June 30, 2002, the Partnership sold 59.0731% of  the
     Champps Americana restaurant in Livonia, Michigan, in twelve
     separate  transactions,  to unrelated  third  parties.   The
     Partnership  received total net sale proceeds of $3,249,211,
     which resulted in a net gain of $1,097,115.  The total  cost
     and  related accumulated depreciation of the interests  sold
     was  $2,451,569  and $299,473, respectively.   For  the  six
     months ended June 30, 2002, the net gain was $673,732.

     Subsequent  to  June  30,  2002,  the  Partnership  sold  an
     additional  8.7735% of the Champps Americana  restaurant  in
     Livonia,   Michigan,  in  two  separate   transactions,   to
     unrelated third parties.  The Partnership received net  sale
     proceeds of approximately $482,000, which resulted in a  net
     gain of approximately $168,000.

     During  the  first  six  months  of  2002,  the  Partnership
     distributed $198,768 of the net sale proceeds to the Limited
     and  General  Partners  as part of their  regular  quarterly
     distributions which represented a return of capital of $8.47
     per  Limited  Partnership  Unit.   The  remaining  net  sale
     proceeds will either be reinvested in additional property or
     distributed to the Partners in the future.

     On  March  30, 2001, the Partnership purchased a  Children's
     World  daycare center in Mundelein, Illinois for $1,618,824.
     The  property  is  leased to ARAMARK Educational  Resources,
     Inc. under a Lease Agreement with a primary term of 15 years
     and annual rental payments of $153,710.


        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)

(4)  Investments in Real Estate - (Continued)

     On  March  8, 2001, the Partnership purchased a 25% interest
     in a parcel of land in Austin, Texas for $283,000.  The land
     is leased to Kona Restaurant Group, Inc. (KRG) under a Lease
     Agreement with a primary term of 17 years and annual  rental
     payments  of  $29,715.  Simultaneously with the purchase  of
     the   land,  the  Partnership  entered  into  a  Development
     Financing  Agreement  under which the  Partnership  advanced
     funds  to  KRG  for  the construction of a  Johnny  Carino's
     restaurant on the site.  The Partnership charged interest on
     the  advances  at a rate of 10.5%.  On September  26,  2001,
     after the development was completed, the Lease Agreement was
     amended  to require annual rental payments of $60,191.   The
     Partnership's   share  of  the  total   acquisition   costs,
     including the cost of the land, was $571,902.  The remaining
     interests in the property are owned by AEI Real Estate  Fund
     85-A Limited Partnership, AEI Net Lease Income & Growth Fund
     XX Limited Partnership, and AEI Income & Growth Fund 23 LLC,
     affiliates of the Partnership.

     On June 14, 2002, the Partnership purchased three Children's
     World   daycare  centers  located  in  Andover,   Minnesota,
     Ballwin,  Missouri and Kimberly, Wisconsin.  The  properties
     were  purchased  for $1,261,166, $1,514,915 and  $1,355,473,
     respectively.    The  properties  are  leased   to   ARAMARK
     Educational  Resources,  Inc. under  Lease  Agreements  with
     primary  terms  of  15 years and annual rental  payments  of
     $120,204, $144,113 and $129,087, respectively.

     In  May, 2001, Huntington Restaurants Group, Inc. (HRG), the
     lessee  of  the  Denny's Restaurant in Covington,  Louisiana
     notified  the Partnership that it was experiencing financial
     problems  and would not make the lease payments  while  they
     worked  out  a  plan  which would enable  them  to  continue
     operations   without  seeking  bankruptcy  protection.    In
     October, 2001, the Partnership received an offer to buy  the
     restaurant  for  $900,000  from an  unrelated  third  party.
     Effective December 10, 2001, the Partnership terminated  the
     Lease  to accommodate the sale. Through this date, HRG  owed
     $80,316  of  rent, which will not be collected and  was  not
     accrued  for  financial reporting purposes.   In  the  third
     quarter  of  2001, a charge to operations  for  real  estate
     impairment  of  $295,354  was  recognized,  which  was   the
     difference between the book value at September 30,  2001  of
     $1,145,354 and the estimated net sales proceeds of $850,000.
     The charge was recorded against the cost of the building and
     equipment.  At December 31, 2001, the land and building were
     classified  as Real Estate Held for Sale.  On  February  19,
     2002,  the  sale closed with the Partnership  receiving  net
     sale  proceeds of $816,143 which resulted in a net  loss  of
     $29,982.

(5)  Payable to AEI Fund Management, Inc. -

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


ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS

        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   success  of  the  General  Partners  of   locating
    properties with favorable risk return characteristics;

    the effect of tenant defaults; and

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


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.

        The Partnership purchases properties and records them  in
the  financial  statements  at the lower  of  cost  or  estimated
realizable   value.   The  Partnership  initially   records   the
properties  at cost (including capitalized acquisition expenses).
The Partnership is required to periodically evaluate the carrying
value  of properties to determine whether their realizable  value
has  declined.   For  properties the Partnership  will  hold  and
operate, management determines whether impairment has occurred by
comparing the property's probability-weighted cash flows  to  its
current carrying value.  For properties held for sale, management
determines  whether  impairment has  occurred  by  comparing  the
property's estimated fair value less cost to sell to its  current
carrying  value.   If  the carrying value  is  greater  than  the
realizable  value, an impairment loss is recorded to  reduce  the
carrying value of the property to its realizable value.  A change
in  these assumptions or analysis could cause material changes in
the carrying value of the properties.

       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  some  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.

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

Results of Operations

        For  the  six  months ended June 30, 2002 and  2001,  the
Partnership  recognized rental income of $761,831  and  $946,807,
respectively.   During the same periods, the  Partnership  earned
investment income of $39,407 and $40,843, respectively.  In 2002,
rental income decreased as a result of the loss of rent from  the
Denny's restaurant and the property sales discussed below.  These
decreases  in  rental income were partially offset by  additional
rent  received from five property acquisitions in 2001 and  2002,
and rent increases on four properties.

        In  May, 2001, Huntington Restaurants Group, Inc.  (HRG),
the  lessee  of  the  Denny's Restaurant in Covington,  Louisiana
notified  the  Partnership  that it  was  experiencing  financial
problems and would not make the lease payments while they  worked
out a plan which would enable them to continue operations without
seeking bankruptcy protection.  In October, 2001, the Partnership
received  an  offer to buy the restaurant for  $900,000  from  an
unrelated   third  party.   Effective  December  10,  2001,   the
Partnership terminated the Lease to accommodate the sale. Through
this  date, HRG owed $80,316 of rent, which will not be collected
and  was  not accrued for financial reporting purposes.   In  the
third  quarter  of 2001, a charge to operations for  real  estate
impairment  of $295,354 was recognized, which was the  difference
between  the  book value at September 30, 2001 of $1,145,354  and
the  estimated  net sales proceeds of $850,000.  The  charge  was
recorded  against  the cost of the building  and  equipment.   At
December 31, 2001, the land and building were classified as  Real
Estate Held for Sale.  On February 19, 2002, the sale closed with
the  Partnership  receiving net sale proceeds of  $816,143  which
resulted in a net loss of $29,982.

        During  the six months ended June 30, 2002 and 2001,  the
Partnership   paid   Partnership   administration   expenses   to
affiliated parties of $144,499 and $137,724, respectively.  These
administration  expenses  include  costs  associated   with   the
management of the properties, processing distributions, reporting
requirements and correspondence to the Limited Partners.   During
the   same   periods,   the  Partnership   incurred   Partnership
administration  and property management expenses  from  unrelated
parties  of  $37,332 and $13,461, respectively.   These  expenses
represent  direct payments to third parties for legal and  filing
fees,  direct administrative costs, outside audit and  accounting
costs, taxes, insurance and other property costs.

        As  of  June 30, 2002, the Partnership's annualized  cash
distribution  rate  was  6.75%, based  on  the  Adjusted  Capital
Contribution.   Distributions of Net Cash  Flow  to  the  General
Partners were subordinated to the Limited Partners as required in
the  Partnership  Agreement.  As a result, 99%  of  distributions
were  allocated  to  Limited  Partners  and  1%  to  the  General
Partners.

        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.

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

Liquidity and Capital Resources

         During   the  six  months  ended  June  30,  2002,   the
Partnership's  cash balances decreased $1,457,691 mainly  as  the
result  of  cash used to purchase property, which  was  partially
offset  by  cash generated from the sale of property.   Net  cash
provided by operating activities decreased from $882,250 in  2001
to  $728,210 in 2002 as a result of a decrease in income  and  an
increase  in  Partnership administration expenses in 2002,  which
were partially offset by net timing differences in the collection
of payments from the lessees and the payment of expenses.

        The  major components of the Partnership's cash flow from
investing activities are investments in real estate and  proceeds
from  the sale of real estate.  During the six months ended  June
30,  2002 and 2001, the Partnership generated cash flow from  the
sale  of  real estate of $2,763,828 and $1,482,939, respectively.
During the same periods, the Partnership expended $4,131,554  and
$2,051,958, respectively, to invest in real properties (inclusive
of  acquisition  expenses)  as  the Partnership  reinvested  cash
generated from property sales.

        Through  December  31,  2001, the  Partnership  sold  its
interest  in the Champps Americana restaurant in Columbus,  Ohio,
in eleven separate transactions, to unrelated third parties.  The
Partnership received total net sale proceeds of $2,295,174, which
resulted  in  a total net gain of $631,607.  The total  cost  and
related  accumulated  depreciation  of  the  interests  sold  was
$1,808,880 and $145,313, respectively.  For the six months  ended
June 30, 2001, the net gain was $289,679.

        Through  June 30, 2002, the Partnership sold its interest
in  the Champps Americana restaurant in Schaumburg, Illinois,  in
thirteen separate transactions, to unrelated third parties.   The
Partnership received total net sale proceeds of $2,892,414, which
resulted  in  a total net gain of $838,268.  The total  cost  and
related  accumulated  depreciation  of  the  interests  sold  was
$2,256,461 and $202,315, respectively.  For the six months  ended
June  30,  2002 and 2001, the net gain was $16,738 and  $160,941,
respectively.

        Through  June 30, 2002, the Partnership sold 59.0731%  of
the  Champps Americana restaurant in Livonia, Michigan, in twelve
separate   transactions,  to  unrelated   third   parties.    The
Partnership received total net sale proceeds of $3,249,211, which
resulted in a net gain of $1,097,115.  The total cost and related
accumulated depreciation of the interests sold was $2,451,569 and
$299,473, respectively.  For the six months ended June 30,  2002,
the net gain was $673,732.

        Subsequent  to  June  30, 2002, the Partnership  sold  an
additional  8.7735%  of  the  Champps  Americana  restaurant   in
Livonia,  Michigan,  in two separate transactions,  to  unrelated
third  parties.   The Partnership received net sale  proceeds  of
approximately  $482,000,  which  resulted  in  a  net   gain   of
approximately $168,000.

        During  the  first  six months of 2002,  the  Partnership
distributed $198,768 of the net sale proceeds to the Limited  and
General Partners as part of their regular quarterly distributions
which  represented  a  return of capital  of  $8.47  per  Limited
Partnership Unit.  The remaining net sale proceeds will either be
reinvested in additional property or distributed to the  Partners
in the future.

        On March 30, 2001, the Partnership purchased a Children's
World daycare center in Mundelein, Illinois for $1,618,824.   The
property is leased to ARAMARK Educational Resources, Inc. under a
Lease Agreement with a primary term of 15 years and annual rental
payments of $153,710.

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

       On March 8, 2001, the Partnership purchased a 25% interest
in  a parcel of land in Austin, Texas for $283,000.  The land  is
leased  to  Kona  Restaurant Group,  Inc.  (KRG)  under  a  Lease
Agreement  with  a  primary term of 17 years  and  annual  rental
payments  of  $29,715.  Simultaneously with the purchase  of  the
land,  the  Partnership  entered  into  a  Development  Financing
Agreement under which the Partnership advanced funds to  KRG  for
the  construction of a Johnny Carino's restaurant  on  the  site.
The  Partnership charged interest on the advances at  a  rate  of
10.5%.   On  September  26,  2001,  after  the  development   was
completed,  the  Lease Agreement was amended  to  require  annual
rental payments of $60,191.  The Partnership's share of the total
acquisition costs, including the cost of the land, was  $571,902.
The  remaining interests in the property are owned  by  AEI  Real
Estate  Fund  85-A Limited Partnership, AEI Net  Lease  Income  &
Growth Fund XX Limited Partnership, and AEI Income & Growth  Fund
23 LLC, affiliates of the Partnership.

         On  June  14,  2002,  the  Partnership  purchased  three
Children's  World daycare centers located in Andover,  Minnesota,
Ballwin,  Missouri and Kimberly, Wisconsin.  The properties  were
purchased    for    $1,261,166,   $1,514,915   and    $1,355,473,
respectively.   The properties are leased to ARAMARK  Educational
Resources, Inc. under Lease Agreements with primary terms  of  15
years  and  annual  rental  payments of  $120,204,  $144,113  and
$129,087, respectively.

       The Partnership's primary use of cash flow is distribution
and  redemption  payments to Partners.  The Partnership  declares
its  regular  quarterly  distributions before  the  end  of  each
quarter and pays the distribution in the first week after the end
of  each quarter.  The Partnership attempts to maintain a  stable
distribution  rate from quarter to quarter.  Redemption  payments
are  paid  to  redeeming Partners in the fourth quarter  of  each
year.   Effective  April 1, 2001, the Partnership's  distribution
rate   was   increased  from  6.5%  to  6.75%.   As   a   result,
distributions were higher in 2002 when compared to 2001.

        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 will not be obligated
to purchase in any year any number of Units that, when aggregated
with  all  other transfers of Units that have occurred since  the
beginning   of  the  same  calendar  year  (excluding   Permitted
Transfers as defined in the Partnership Agreement), would  exceed
5%  of the total number of Units outstanding on January 1 of such
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  2001, eight Limited Partners redeemed a total  of
86.83  Partnership  Units  for $68,050  in  accordance  with  the
Partnership  Agreement.   The Partnership  acquired  these  Units
using Net Cash Flow from operations.  In prior years, twenty-five
Limited Partners redeemed a total of 677.82 Partnership Units for
$579,879.    The  redemptions  increase  the  remaining   Limited
Partners' ownership interest in the Partnership.

       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 on both a short-term and long-term basis.



                   PART II - OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

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

ITEM 2.CHANGES IN SECURITIES

      None.

ITEM 3.DEFAULTS UPON SENIOR SECURITIES

      None.

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

      None

ITEM 5.OTHER INFORMATION

      None.

ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K

       a. Exhibits -
                             Description

       10.1  Assignment of Purchase and Sale Agreement dated May  24,
             2002  between  the Partnership  and AEI Fund Management,
             Inc. relating  to  the  property  at  1485  Bunker  Lake
             Boulevard   NW,  Andover,   Minnesota  (incorporated  by
             reference  to  Exhibit  10.1 of Form 8-K filed  June 18,
             2002).

       10.2  Assignment of Purchase and Sale Agreement dated May  24,
             2002  between  the  Partnership and AEI Fund Management,
             Inc. relating  to  the  property at 497 Big  Bend  Road,
             Ballwin,  Missouri (incorporated by reference to Exhibit
             10.2  of  Form 8-K filed June 18, 2002).

       10.3  Assignment of Purchase and Sale Agreement dated May  24,
             2002  between  the  Partnership and AEI Fund Management,
             Inc.  relating  to  the  property at 749 Truman  Street,
             Kimberly,   Wisconsin  (incorporated  by  reference   to
             Exhibit 10.3 of  Form 8-K filed June 18, 2002).

       10.4  Net  Lease  Agreement  dated June 14, 2002  between  the
             Partnership  and  ARAMARK  Educational  Resources,  Inc.
             relating to  the  property at 1485 Bunker Lake Boulevard
             NW,  Andover,  Minnesota (incorporated  by  reference to
             Exhibit 10.4 of  Form 8-K filed June 18, 2002).

       10.5  Net  Lease  Agreement dated  June 14, 2002  between  the
             Partnership  and  ARAMARK  Educational  Resources,  Inc.
             relating  to   the   property  at  497 Big   Bend  Road,
             Ballwin,  Missouri (incorporated by reference to Exhibit
             10.5 of Form 8-K  filed June 18, 2002).

       10.6  Net  Lease  Agreement dated  June 14, 2002  between  the
             Partnership  and ARAMARK  Educational  Resources,   Inc.
             relating   to   the   property  at  749  Truman  Street,
             Kimberly,   Wisconsin  (incorporated  by  reference   to
             Exhibit 10.6 of Form 8-K  filed June 18, 2002).

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

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

                   PART II - OTHER INFORMATION
                           (Continued)

ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K  (Continued)

       b. Reports filed on Form  8-K  -
             On  June  18, 2002, the Partnership
             filed  a  Form  8-K  reporting  the
             acquisition  of  Children's   World
             daycare    centers   in    Andover,
             Minnesota,  Ballwin,  Missouri  and
             Kimberly, Wisconsin.


                           SIGNATURES

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


Dated:  August 6, 2002        AEI Income & Growth Fund XXI
                              Limited Partnership
                              By:  AEI Fund Management XXI, Inc.
                              Its: Managing General Partner



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



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