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:  September 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 September 30, 2002 and December 31, 2001

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

           Income

           Cash Flows

           Changes in Partners' Capital

         Notes to Financial Statements

 Item 2. Management's Discussion and Analysis

 Item 3. Controls and Procedures

PART II. Other Information

 Item 1. Legal Proceedings

 Item 2. 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

          Signatures

          Certifications

<PAGE>
        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP

                          BALANCE SHEET

            SEPTEMBER 30, 2002 AND DECEMBER 31, 2001

                           (Unaudited)

                             ASSETS

                                                   2002            2001

CURRENT ASSETS:
  Cash and Cash Equivalents                    $ 5,045,472     $ 4,460,840
  Receivables                                            0           9,567
                                                -----------     -----------
      Total Current Assets                       5,045,472       4,470,407
                                                -----------     -----------
INVESTMENTS IN REAL ESTATE:
  Land                                           4,728,124       4,976,315
  Buildings and Equipment                       10,433,312       9,175,172
  Accumulated Depreciation                      (1,366,814)     (1,418,203)
                                                -----------     -----------
                                                13,794,622      12,733,284
  Real Estate Held for Sale                              0         846,124
                                                -----------     -----------
      Net Investments in Real Estate            13,794,622      13,579,408
                                                -----------     -----------
          Total Assets                         $18,840,094     $18,049,815
                                                ===========     ===========


                       LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
  Payable to AEI Fund Management, Inc.         $   102,792     $    37,491
  Distributions Payable                            405,719         405,719
  Unearned Rent                                        237               0
                                                -----------     -----------
      Total Current Liabilities                    508,748         443,210
                                                -----------     -----------
PARTNERS' CAPITAL:
  General Partners                                  21,179          13,932
  Limited Partners, $1,000 Unit Value;
      24,000 Units authorized and issued;
      23,235 Units outstanding                  18,310,167      17,592,673
                                                -----------     -----------
      Total Partners' Capital                   18,331,346      17,606,605
                                                -----------     -----------
       Total Liabilities and Partners' Capital $18,840,094     $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 SEPTEMBER 30

                           (Unaudited)


                              Three Months Ended        Nine Months Ended
                            9/30/02        9/30/01    9/30/02       9/30/01

INCOME:
   Rent                    $ 425,700     $ 424,785  $ 1,187,531   $ 1,371,592
   Investment Income          14,066        20,205       53,473        61,048
                            ---------     ---------  -----------   -----------
        Total Income         439,766       444,990    1,241,004     1,432,640
                            ---------     ---------  -----------   -----------

EXPENSES:
   Partnership Administration -
     Affiliates               54,290        82,427      198,789       220,151
   Partnership Administration
     and Property Management -
     Unrelated Parties        11,769        10,918       49,101        24,379
   Depreciation              113,249       121,520      305,024       366,704
   Real Estate Impairment          0       295,354            0       295,354
                            ---------     ---------  -----------   -----------
        Total Expenses       179,308       510,219      552,914       906,588
                            ---------     ---------  -----------   -----------

OPERATING INCOME (LOSS)      260,458       (65,229)     688,090       526,052

GAIN ON SALE OF REAL ESTATE  603,426       494,429    1,263,914       945,049
                            ---------     ---------  -----------   -----------
NET INCOME                 $ 863,884     $ 429,200  $ 1,952,004   $ 1,471,101
                            =========     =========  ===========   ===========

NET INCOME ALLOCATED:
   General Partners        $   8,639     $  16,292  $    19,520   $    38,711
   Limited Partners          855,245       412,908    1,932,484     1,432,390
                            ---------     ---------  -----------   -----------
                           $ 863,884     $ 429,200  $ 1,952,004   $ 1,471,101
                            =========     =========  ===========   ===========

NET INCOME PER
  LIMITED PARTNERSHIP UNIT
  (23,235 and 23,322 weighted
   average Units outstanding
   in 2002 and 2001,
   respectively)           $   36.81     $   17.70  $     83.17   $     61.42
                            =========     =========  ===========   ===========

 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 SEPTEMBER 30

                           (Unaudited)

                                                       2002          2001
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net  Income                                   $ 1,952,004   $ 1,471,101

   Adjustments to Reconcile Net Income to Net Cash
   Provided by Operating Activities:
     Depreciation                                      305,024       366,704
     Real Estate Impairment                                  0       295,354
     Gain on Sale of Real Estate                    (1,263,914)     (945,049)
     (Increase) Decrease in Receivables                  9,567        (1,071)
     Increase (Decrease) in Payable to
        AEI Fund Management, Inc.                       65,301       (61,934)
     Increase in Unearned Rent                             237        80,450
                                                    -----------   -----------
        Total Adjustments                             (883,785)     (265,546)
                                                    -----------   -----------
        Net Cash Provided By
        Operating Activities                         1,068,219     1,205,555
                                                    -----------   -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Investments in  Real Estate                     (4,140,223)   (2,174,765)
    Proceeds from Sale of Real Estate                4,883,899     3,152,532
    Payments Received on Short-Term Note Receivable          0       675,920
                                                    -----------   -----------
        Net Cash Provided By
        Investing Activities                           743,676     1,653,687
                                                    -----------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Increase in Distributions Payable                         0        15,025
   Distributions to  Partners                       (1,227,263)   (1,212,110)
                                                    -----------   -----------
        Net Cash Used For
          Financing Activities                      (1,227,263)   (1,197,085)
                                                    -----------   -----------

NET INCREASE IN CASH AND CASH EQUIVALENTS              584,632     1,662,157

CASH AND CASH EQUIVALENTS, beginning of  period      4,460,840     1,388,156
                                                    -----------   -----------
CASH  AND  CASH  EQUIVALENTS, end of period        $ 5,045,472   $ 3,050,313
                                                    ===========   ===========

 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 SEPTEMBER 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              (12,121)    (1,199,989)  (1,212,110)

  Net Income                  38,711      1,432,390    1,471,101
                             --------    -----------  -----------  -----------
BALANCE, September 30, 2001 $(11,653)   $17,364,958  $17,353,305    23,322.18
                             ========    ===========  ===========  ===========


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

  Distributions              (12,273)    (1,214,990)  (1,227,263)

  Net Income                  19,520      1,932,484    1,952,004
                             --------    -----------  -----------  -----------
BALANCE, September 30, 2002 $ 21,179    $18,310,167  $18,331,346    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

                       SEPTEMBER 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

                       SEPTEMBER 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

                       SEPTEMBER 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 nine months ended September 30, 2001, the net  gain
     was $289,679.

     Through  September  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   nine   months   ended
     September  30, 2002 and 2001, the net gain was  $16,738  and
     $605,992, respectively.

     Through September 30, 2002, the Partnership sold 86.6082% of
     the  Champps  Americana restaurant in Livonia, Michigan,  in
     eighteen  separate transactions, to unrelated third parties.
     The   Partnership  received  total  net  sale  proceeds   of
     $4,765,601, which resulted in a net gain of $1,631,869.  The
     total  cost  and  related accumulated  depreciation  of  the
     interests  sold  was $3,594,292 and $460,560,  respectively.
     For  the nine months ended September 30, 2002, the net  gain
     was $1,208,486.

     Subsequent  to September 30, 2002, the Partnership  sold  an
     additional  8.5171% of the Champps Americana  restaurant  in
     Livonia,   Michigan,  in  two  separate   transactions,   to
     unrelated third parties.  The Partnership received net  sale
     proceeds of approximately $468,000, which resulted in a  net
     gain of approximately $166,000.

     During  the  first  nine  months of  2002,  the  Partnership
     distributed $234,149 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 $9.98
     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

                       SEPTEMBER 30, 2002
                           (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 were purchased 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.

     In  the third quarter of 2002, the Partnership sold 23.8161%
     of the Johnny Carino's restaurant in Austin, Texas, in three
     separate  transactions,  to unrelated  third  parties.   The
     Partnership  received total net sale proceeds  of  $603,681,
     which resulted in a net gain of $68,672.  The total cost and
     related  accumulated depreciation of the interests sold  was
     $544,819 and $9,810, respectively.

     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 $1,264,207, $1,517,777 and  $1,358,239,
     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.

     On  October 31, 2002, the Partnership purchased a parcel  of
     land  in  Farmington, New Mexico for $810,000.  The land  is
     leased to SFG Farmington I Limited Partnership (SFG) under a
     Lease  Agreement with a primary term of 17 years and  annual
     rental   payments  of  $85,050.   Simultaneously  with   the
     purchase  of  the  land,  the  Partnership  entered  into  a
     Development  Financing Agreement under which the Partnership
     will  advance funds to SFG for the construction of a  Johnny
     Carino's restaurant on the site.  The total purchase  price,
     including  the  cost  of  the land,  will  be  approximately
     $2,290,000.  After the construction is complete,  the  Lease
     Agreement will be amended to require annual rental  payments
     of approximately $240,450.


        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS

                       SEPTEMBER 30, 2002
                           (Continued)

(4)  Investments in Real Estate - (Continued)

     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.


The Application of Critical Accounting Policies

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

        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)

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

Results of Operations

       For the nine months ended September 30, 2002 and 2001, the
Partnership   recognized   rental  income   of   $1,187,531   and
$1,371,592,   respectively.   During  the   same   periods,   the
Partnership  earned  investment income of  $53,473  and  $61,048,
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 nine months ended September 30, 2002 and 2001,
the  Partnership  paid  Partnership  administration  expenses  to
affiliated parties of $198,789 and $220,151, 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  $49,101 and $24,379, 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  September 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  nine months ended September  30,  2002,  the
Partnership's  cash  balances increased $584,632  mainly  as  the
result  of  cash generated from the sale of property,  which  was
partially  offset  by cash used to purchase property.   Net  cash
provided  by  operating activities decreased from  $1,205,555  in
2001  to  $1,068,219 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 nine  months  ended
September 30, 2002 and 2001, the Partnership generated cash  flow
from  the  sale  of  real  estate of $4,883,899  and  $3,152,532,
respectively.  During the same periods, the Partnership  expended
$4,140,223  and  $2,174,765,  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 nine months ended
September 30, 2001, the net gain was $289,679.

        Through  September  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  nine
months  ended  September  30, 2002 and 2001,  the  net  gain  was
$16,738 and $605,992, respectively.

        Through September 30, 2002, the Partnership sold 86.6082%
of  the  Champps  Americana restaurant in Livonia,  Michigan,  in
eighteen separate transactions, to unrelated third parties.   The
Partnership received total net sale proceeds of $4,765,601, which
resulted in a net gain of $1,631,869.  The total cost and related
accumulated depreciation of the interests sold was $3,594,292 and
$460,560, respectively.  For the nine months ended September  30,
2002, the net gain was $1,208,486.

        Subsequent to September 30, 2002, the Partnership sold an
additional  8.5171%  of  the  Champps  Americana  restaurant   in
Livonia,  Michigan,  in two separate transactions,  to  unrelated
third  parties.   The Partnership received net sale  proceeds  of
approximately  $468,000,  which  resulted  in  a  net   gain   of
approximately $166,000.

        During  the  first nine months of 2002,  the  Partnership
distributed $234,149 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  $9.98  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 were purchased  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.

        In  the  third  quarter  of 2002,  the  Partnership  sold
23.8161%  of the Johnny Carino's restaurant in Austin, Texas,  in
three  separate  transactions, to unrelated third  parties.   The
Partnership  received total net sale proceeds of $603,681,  which
resulted  in  a net gain of $68,672.  The total cost and  related
accumulated  depreciation of the interests sold was $544,819  and
$9,810, respectively.

         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    $1,264,207,   $1,517,777   and    $1,358,239,
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.

       On October 31, 2002, the Partnership purchased a parcel of
land  in Farmington, New Mexico for $810,000.  The land is leased
to  SFG  Farmington  I Limited Partnership (SFG)  under  a  Lease
Agreement  with  a  primary term of 17 years  and  annual  rental
payments  of  $85,050.  Simultaneously with the purchase  of  the
land,  the  Partnership  entered  into  a  Development  Financing
Agreement under which the Partnership will advance funds  to  SFG
for the construction of a Johnny Carino's restaurant on the site.
The total purchase price, including the cost of the land, will be
approximately  $2,290,000.  After the construction  is  complete,
the  Lease  Agreement  will be amended to require  annual  rental
payments of approximately $240,450.

       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.


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

        On  October  1, 2002, eight Limited Partners  redeemed  a
total of 210.02 Partnership Units for $156,938 in accordance with
the  Partnership Agreement.  The Partnership acquired these Units
using  Net  Cash  Flow from operations.  In prior years,  thirty-
three  Limited  Partners redeemed a total of  764.65  Partnership
Units  for  $647,929.   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.

ITEM 3. CONTROLS AND PROCEDURES

       (a) Evaluation of disclosure controls and procedures

        Under  the  supervision  and with  the  participation  of
management, including its President and Chief Financial  Officer,
the  Managing  General Partner of the Partnership  evaluated  the
effectiveness  of  the  design and operation  of  its  disclosure
controls and procedures (as defined in Rule [13a-14(c)/15d-14(c)]
under  the Exchange Act) related to the Partnership as of a  date
(the  "Evaluation Date") within 90 days prior to the filing  date
of  this  report.  Based upon that evaluation, the President  and
Chief Financial Officer of the Managing General Partner concluded
that,  as  of  the Evaluation Date, the disclosure  controls  and
procedures are effective in timely alerting them to the  material
information  relating to the Partnership required to be  included
in periodic SEC filings.

       (b)  Changes in internal controls

         There   were   no  significant  changes  made   in   the
Partnership's internal controls during the period covered by this
report or, to the Managing General Partner's knowledge, in  other
factors that could significantly affect these controls subsequent
to the date of their evaluation.


                   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.

                   PART II - OTHER INFORMATION
                           (Continued)

ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K

      (a) Exhibits -
                             Description

10.1  Development Financing Agreement dated October 31,  2002
      between   the  Partnership  and  SFG  Farmington  I   Limited
      Partnership  relating  to  the property  at  3500  East  Main
      Street, Farmington, New Mexico.

10.2  Net Lease Agreement dated October 31, 2002 between  the
      Partnership   and  SFG  Farmington  I  Limited   Partnership.
      relating   to   the  property  at  3500  East  Main   Street,
      Farmington, New Mexico.

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.

      (b)  Reports filed on  Form  8-K  - None


                           SIGNATURES

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


Dated:  November 1, 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)




                         CERTIFICATIONS


I, Robert P. Johnson, certify that:

1.  I  have reviewed this quarterly report on Form 10-QSB of  AEI
Income & Growth Fund XXI Limited Partnership;

2.  Based on my knowledge, this quarterly report does not contain
any  untrue  statement of a material fact  or  omit  to  state  a
material fact necessary to make the statements made, in light  of
the  circumstances  under which such statements  were  made,  not
misleading  with respect to the period covered by this  quarterly
report;

3.  Based  on my knowledge; the financial statements,  and  other
financial  information included in this quarterly report,  fairly
present in all material respects the financial condition, results
of  operations and cash flows of the registrant as of,  and  for,
the periods presented in this quarterly report;

4.   The  registrant's  other  certifying  officers  and  I   are
responsible for establishing and maintaining disclosure  controls
and  procedures (as defined in Exchange Act Rules 13a-14 and 15d-
14) for the registrant and have;

       a)   designed  such disclosure controls and procedures  to
ensure  that  material information relating  to  the  registrant,
including its consolidated subsidiaries, is made known to  us  by
others  within those entities, particularly during the period  in
which this quarterly report is being prepared;

        b)   evaluated  the  effectiveness  of  the  registrant's
disclosure  controls and procedures as of a date within  90  days
prior   to  the  filing  date  of  this  quarterly  report   (the
"Evaluation Date"); and

       c)   presented  in this quarterly report  our  conclusions
about the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;

5.   The  registrant's  other  certifying  officers  and  I  have
disclosed,   based  on  our  most  recent  evaluation,   to   the
registrant's  auditors  and the audit committee  of  registrant's
board   of   directors  (or  persons  performing  the  equivalent
functions):

      a)  all significant deficiencies in the design or operation
of   internal   controls   which  could  adversely   affect   the
registrant's  ability  to record, process, summarize  and  report
financial data and have identified for the registrant's  auditors
any material weaknesses in internal controls; and

       b)   any  fraud,  whether or not material,  that  involves
management or other employees who have a significant role in  the
registrant's internal controls; and

6.   The  registrant's  other  certifying  officers  and  I  have
indicated  in  this quarterly report whether or  not  there  were
significant changes in internal controls or in other factors that
could  significantly affect internal controls subsequent  to  the
date  of  our  most recent evaluation, including  any  corrective
actions  with  regard  to significant deficiencies  and  material
weaknesses.



Dated:  November 1, 2002      /s/ Robert P Johnson
                                  Robert P. Johnson, President
                                  AEI Fund Management XXI, Inc.
                                  Managing General Partner




                         CERTIFICATIONS


I, Mark E. Larson, certify that:

1.  I  have reviewed this quarterly report on Form 10-QSB of  AEI
Income & Growth Fund XXI Limited Partnership;

2.  Based on my knowledge, this quarterly report does not contain
any  untrue  statement of a material fact  or  omit  to  state  a
material fact necessary to make the statements made, in light  of
the  circumstances  under which such statements  were  made,  not
misleading  with respect to the period covered by this  quarterly
report;

3.  Based  on my knowledge; the financial statements,  and  other
financial  information included in this quarterly report,  fairly
present in all material respects the financial condition, results
of  operations and cash flows of the registrant as of,  and  for,
the periods presented in this quarterly report;

4.   The  registrant's  other  certifying  officers  and  I   are
responsible for establishing and maintaining disclosure  controls
and  procedures (as defined in Exchange Act Rules 13a-14 and 15d-
14) for the registrant and have;

       a)   designed  such disclosure controls and procedures  to
ensure  that  material information relating  to  the  registrant,
including its consolidated subsidiaries, is made known to  us  by
others  within those entities, particularly during the period  in
which this quarterly report is being prepared;

        b)   evaluated  the  effectiveness  of  the  registrant's
disclosure  controls and procedures as of a date within  90  days
prior   to  the  filing  date  of  this  quarterly  report   (the
"Evaluation Date"); and

       c)   presented  in this quarterly report  our  conclusions
about the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;

5.   The  registrant's  other  certifying  officers  and  I  have
disclosed,   based  on  our  most  recent  evaluation,   to   the
registrant's  auditors  and the audit committee  of  registrant's
board   of   directors  (or  persons  performing  the  equivalent
functions):

      a)  all significant deficiencies in the design or operation
of   internal   controls   which  could  adversely   affect   the
registrant's  ability  to record, process, summarize  and  report
financial data and have identified for the registrant's  auditors
any material weaknesses in internal controls; and

       b)   any  fraud,  whether or not material,  that  involves
management or other employees who have a significant role in  the
registrant's internal controls; and

6.   The  registrant's  other  certifying  officers  and  I  have
indicated  in  this quarterly report whether or  not  there  were
significant changes in internal controls or in other factors that
could  significantly affect internal controls subsequent  to  the
date  of  our  most recent evaluation, including  any  corrective
actions  with  regard  to significant deficiencies  and  material
weaknesses.



Dated:  November 1, 2002      /s/ Mark E Larson
                                  Mark E. Larson, Chief Financial Officer
                                  AEI Fund Management XXI, Inc.
                                  Managing General Partner