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, 1998
                                
                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, 1998 and  December 31, 1997  

         Statements for the Periods ended September 30, 1998  and 1997:

            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
                                
            SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
                                
                           (Unaudited)
                                
                             ASSETS
                                
                                                       1998           1997
CURRENT ASSETS:
  Cash and Cash Equivalents                        $   852,942    $ 2,506,790
  Receivables                                            3,334        162,677
                                                    -----------    -----------
      Total Current Assets                             856,276      2,669,467
                                                    -----------    -----------
INVESTMENTS IN REAL ESTATE:
  Land                                               6,910,968      6,612,866
  Buildings and Equipment                           11,321,283      8,779,112
  Construction in Progress                              92,791      1,078,108
  Property Acquisition Costs                            50,334         88,696
  Accumulated Depreciation                            (692,517)      (399,150)
                                                    -----------    -----------
      Net Investments in Real Estate                17,682,859     16,159,632
                                                    -----------    -----------
         Total  Assets                             $18,539,135    $18,829,099
                                                    ===========    ===========


                      LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
  Payable to AEI Fund Management, Inc.             $    23,132    $    56,307
  Distributions Payable                                481,250        324,841
  Unearned Rent                                         24,200              0
                                                    -----------    -----------
      Total Current Liabilities                        528,582        381,148
                                                    -----------    -----------
PARTNERS' CAPITAL (DEFICIT):
  General Partners                                     (29,081)       (24,706)
  Limited Partners, $1,000 Unit Value;
   24,000 Units authorized and issued;
   23,829 outstanding                               18,039,634     18,472,657
                                                    -----------    -----------
     Total Partners' Capital                        18,010,553     18,447,951
                                                    -----------    -----------
        Total Liabilities and Partners' Capital    $18,539,135    $18,829,099
                                                    ===========    ===========
                                
                                                               
 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
                                 9/30/98      9/30/97    9/30/98       9/30/97

INCOME:
   Rent                        $ 452,922    $ 282,333   $1,247,467  $  698,606
   Investment Income              14,374      100,539      140,616     399,667
                                ---------    ---------   ----------  ----------
        Total Income             467,296      382,872    1,388,083   1,098,273
                                ---------    ---------   ----------  ----------

EXPENSES:
   Partnership Administration -
    Affiliates                    58,163       58,760      187,294     173,033
   Partnership Administration 
    and Property Management - 
    Unrelated Parties             30,853       30,073       94,495      82,729
   Depreciation                  123,898       65,756      324,522     181,593
                                ---------    ---------   ----------  ----------
        Total Expenses           212,914      154,589      606,311     437,355
                                ---------    ---------   ----------  ----------

OPERATING INCOME                 254,382      228,283      781,772     660,918

GAIN ON SALE OF REAL ESTATE       65,440       42,582      235,377      42,582
                                ---------    ---------   ----------  ----------
NET INCOME                     $ 319,822    $ 270,865   $1,017,149  $  703,500
                                =========    =========   ==========  ==========

NET INCOME ALLOCATED:
  General Partners             $   3,198    $   2,709   $   10,171  $    7,035
  Limited Partners               316,624      268,156    1,006,978     696,465
                                ---------    ---------   ----------  ----------
                               $ 319,822    $ 270,865   $1,017,149  $  703,500
                                =========    =========   ==========  ==========

NET INCOME PER
 LIMITED PARTNERSHIP UNIT
 (23,829, 24,000, 23,829 
 and 23,952 weighted average 
 Units outstanding for the 
 periods, respectively)        $   13.29    $   11.17   $    42.26  $    29.08
                                =========    =========   ==========  ==========


 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)
                                 
                                                        1998            1997

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net  Income                                      $ 1,017,149    $   703,500

   Adjustments to Reconcile Net Income to Net Cash
   Provided by Operating Activities:
     Depreciation                                       324,522        181,593
     Gain on Sale of Real Estate                       (235,377)       (42,582)
     (Increase) Decrease in Receivables                 159,343        (83,917)
     Decrease in Payable to
        AEI Fund Management, Inc.                       (33,175)       (61,816)
     Increase in Unearned Rent                           24,200         55,971
                                                     -----------    -----------
        Total Adjustments                               239,513         49,249
                                                     -----------    -----------
        Net Cash Provided By
        Operating Activities                          1,256,662        752,749
                                                     -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Investments in Real Estate                        (2,475,090)    (5,959,321)
   Proceeds from Sale of Real Estate                    862,718        225,622
                                                     -----------    -----------
        Net Cash Used For
        Investing Activities                         (1,612,372)    (5,733,699)
                                                     -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Capital Contributions from Limited Partners                0        436,651
   Organization and Syndication Costs                         0        (57,869)
   Increase in Distributions Payable                    156,409         51,607
   Distributions to Partners                         (1,454,547)    (1,451,605)
                                                     -----------    -----------
        Net Cash Used For
        Financing Activities                         (1,298,138)    (1,021,216)
                                                     -----------    -----------

NET DECREASE  IN CASH AND CASH EQUIVALENTS           (1,653,848)    (6,002,166)

CASH AND CASH EQUIVALENTS, beginning of period        2,506,790     10,729,033
                                                     -----------    -----------
CASH AND CASH EQUIVALENTS, end of period            $   852,942    $ 4,726,867
                                                     ===========    ===========

 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, 1996  $ (9,754)   $19,544,277   $19,534,523    23,563.35

  Capital Contributions            0        436,651       436,651       436.65

  Organization and 
   Syndication Costs               0        (57,869)      (57,869)

  Distributions              (14,516)    (1,437,089)   (1,451,605)

  Net Income                   7,035        696,465       703,500
                            ---------    -----------   -----------  -----------
BALANCE, September 30,1997 $ (17,235)   $19,182,435   $19,165,200    24,000.00
                            =========    ===========   ===========  ===========


BALANCE, December 31, 1997 $ (24,706)   $18,472,657   $18,447,951    23,828.87

  Distributions              (14,546)    (1,440,001)   (1,454,547)

  Net Income                  10,171      1,006,978     1,017,149
                            ---------    -----------   -----------  -----------
BALANCE, September 30,1998 $ (29,081)   $18,039,634   $18,010,553    23,828.87
                            =========    ===========   ===========  =========== 


 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, 1998
                                
                           (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 of  the  Partnership.
     Robert  P.  Johnson, the President and sole  shareholder  of
     AFM,  serves  as  the  Individual  General  Partner  of  the
     Partnership.  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
     Partnership    offering   terminated   when   the    maximum
     subscription  limit  of  24,000  Limited  Partnership  Units
     ($24,000,000) 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 the  operation
     of the Partnership, 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
                           (Continued)
                                
(2)  Organization - (Continued)

     Any  Net  Proceeds  of Sale, as defined, from  the  sale  or
     financing of the Partnership's 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  the  Partnership's
     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 the Partnership's 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.
                                
        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)
                                
(3)  Investments in Real Estate -

     The  Partnership  leases its properties to  various  tenants
     through triple net leases, which are classified as operating
     leases.  Under a triple net lease, the lessee is responsible
     for  all  real estate taxes, insurance, maintenance, repairs
     and  operating expenses of the property.  The initial  Lease
     terms are 20 years except for the Caribou Coffee , which  is
     18  years, and the Media Play retail store discussed  below.
     The  Leases  contain renewal options which  may  extend  the
     Lease term an additional 10 years for the Arby's and Caribou
     Coffee  store,  an additional 15 years for the  Denny's  and
     Champps  Americana restaurants and 25 years for  the  Garden
     Ridge  retail store.  The Leases contain rent clauses  which
     entitle the Partnership to receive additional rent in future
     years based on stated rent increases.  Certain lessees  have
     been granted options to purchase the property.  Depending on
     the  lease,  the  purchase price is either determined  by  a
     formula, or is the greater of the fair market value  of  the
     property  or  the  amount determined by a formula.   In  all
     cases, if the option were to be exercised by the lessee, the
     purchase  price would be greater than the original  cost  of
     the property.
     
     The  Partnership's  properties are all  commercial,  single-
     tenant  buildings.   The cost of the  property  and  related
     accumulated  depreciation  at  September  30,  1998  are  as
     follows:

                                           Buildings and            Accumulated
Property                           Land      Equipment      Total  Depreciation

Arby's, Montgomery, AL        $   328,310  $   425,794  $   754,104   $ 56,773
Media Play, Apple Valley, MN      239,690      594,170      833,860    102,428
Garden Ridge, Pineville, NC     1,181,253    2,463,138    3,644,391    246,314
Champps Americana,
   Columbus, OH                   242,937      478,441      721,378     44,857
Denny's, Covington, LA            532,844      772,104    1,304,948     54,174
Caribou Coffee, Charlotte, NC     705,394      605,204    1,310,598     30,331
Champps Americana,
   San Antonio, TX              1,127,016    1,706,341    2,833,357     63,524
Champps Americana,
   Schaumburg, IL                 959,278    1,297,184    2,256,462     43,277
Champps Americana,
   Livonia, MI                  1,131,499    2,978,907    4,110,406     50,839
Champps Americana,
   Centerville, OH                462,747            0      462,747          0
                               -----------   -----------  ----------  ---------
                              $ 6,910,968  $11,321,283  $18,232,251  $ 692,517
                               ===========   ===========  ==========  =========

     On  December  21,  1995, the Partnership purchased  a  34.0%
     interest  in  a  Media Play retail store  in  Apple  Valley,
     Minnesota  for $1,414,060.  The property was leased  to  The
     Musicland Group, Inc. (MGI) under a Lease Agreement  with  a
     primary  term  of  18  years and annual rental  payments  of
     $139,587.
     
                                
        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)
                                
(3)  Investments in Real Estate - (Continued)

     In  December,  1996,  the Partnership  and  MGI  reached  an
     agreement in which MGI would buy out and terminate the Lease
     Agreement  by making a payment of $800,000, which was  equal
     to  approximately two years' rent.  The Partnership's  share
     of  such  payment  was $272,000.  Under the  Agreement,  MGI
     remained in possession of the property and performed all  of
     its  obligations  under  the  net  lease  agreement  through
     January  31, 1997 at which time it vacated the property  and
     made  it  available for re-let to another tenant.   MGI  was
     responsible for all maintenance and management costs of  the
     property  through  JanuaryE31, 1997  after  which  date  the
     Partnership  became responsible for its  share  of  expenses
     associated with the property until it is re-let or sold.   A
     specialist in commercial property leasing has been  retained
     to locate a new tenant for the property.
     
     As  of  December  31, 1997, based on an analysis  of  market
     conditions in the area, it was determined the fair value  of
     the   Partnership's   interest  in  the   Media   Play   was
     approximately $748,000.  In the fourth quarter  of  1997,  a
     charge  to operations for real estate impairment of $580,200
     was  recognized,  which is the difference between  the  book
     value  at  DecemberE31, 1997 of $1,328,200 and the estimated
     market  value of $748,000.  The charge was recorded  against
     the cost of the land, building and equipment.
     
     On  March  14, 1997, the Partnership purchased a  parcel  of
     land  in  San  Antonio, Texas for $1,032,299.  The  land  is
     leased  to Champps Americana, Inc. (Champps) under  a  Lease
     Agreement with a primary term of 20 years and annual  rental
     payments  of  $83,451.   Effective September  9,  1997,  the
     annual rent was increased to $128,156.  Simultaneously  with
     the  purchase  of the land, the Partnership entered  into  a
     Development  Financing Agreement under which the Partnership
     advanced funds to Champps for the construction of a  Champps
     Americana   restaurant   on  the   site.    Initially,   the
     Partnership charged interest on the advances at  a  rate  of
     7.0%.   Effective September 9, 1997, the interest  rate  was
     increased  to  10.75%.   On December  23,  1997,  after  the
     development  was completed, the Lease Agreement was  amended
     to  require  annual  rental  payments  of  $296,023.   Total
     acquisition  costs, including the cost  of  the  land,  were
     $2,833,357.
     
     On  March  19,  1997,  the Partnership purchased  a  Denny's
     restaurant  in  Covington, Louisiana  for  $1,304,949.   The
     property  is  leased to Huntington Restaurants  Group,  Inc.
     under a Lease Agreement with a primary term of 20 years  and
     annual rental payments of $141,243.
     
                                
        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)
                                
(3)  Investments in Real Estate - (Continued)

     On  April  21,  1997,  the  Partnership  purchased  a  49.6%
     interest  in  a parcel of land in Schaumburg,  Illinois  for
     $876,387.   The  land  is leased to Champps  under  a  Lease
     Agreement with a primary term of 20 years and annual  rental
     payments of $66,906.  Effective October 17, 1997, the annual
     rent  was  increased to $102,749.  Simultaneously  with  the
     purchase  of  the  land,  the  Partnership  entered  into  a
     Development  Financing Agreement under which the Partnership
     advanced funds to Champps for the construction of a  Champps
     Americana   restaurant   on  the   site.    Initially,   the
     Partnership charged interest on the advances at  a  rate  of
     7.0%.   Effective  October 17, 1997, the interest  rate  was
     increased  to  10.75%.   On December  31,  1997,  after  the
     development  was completed, the Lease Agreement was  amended
     to   require  annual  rental  payments  of  $236,479.    The
     Partnership's   share  of  the  total   acquisition   costs,
     including  the  cost  of  the  land,  was  $2,256,462.   The
     remaining  interests in the property are owned  by  AEI  Net
     Lease  Income & Growth Fund XX Limited Partnership  and  Net
     Lease   Income  &  Growth  Fund  84-A  Limited  Partnership,
     affiliates of the Partnership.
     
     On  July 8, 1997, the Partnership purchased a parcel of land
     in  Livonia, Michigan for $1,074,384.  The land is leased to
     Champps  under a Lease Agreement with a primary term  of  20
     years  and  annual  rental payments of  $75,207.   Effective
     January  3, 1998, the annual rent was increased to $115,496.
     Simultaneously   with  the  purchase  of   the   land,   the
     Partnership  entered into a Development Financing  Agreement
     under  which  the Partnership advanced funds to Champps  for
     the  construction of a Champps Americana restaurant  on  the
     site.   Initially, the Partnership charged interest  on  the
     advances at a rate of 7.0%.  Effective January 3, 1998,  the
     interest  rate  was increased to 10.75%.  On May  19,  1998,
     after the development was completed, the Lease Agreement was
     amended  to  require  annual rental  payments  of  $429,135.
     Total  acquisition costs, including the cost  of  the  land,
     were $4,110,406.
     
     On July 31, 1997, the Partnership purchased a 93.1% interest
     in  a Caribou Coffee store in Charlotte, North Carolina  for
     $1,310,598.   The  property  is  leased  to  Caribou  Coffee
     Company, Inc. under a Lease Agreement with a primary term of
     18  years  and  annual  rental payments  of  $146,438.   The
     remaining  interest  in  the  property  is  owned   by   AEI
     Institutional  Net  Lease Fund '93 Limited  Partnership,  an
     affiliate of the Partnership.
     
     On August 28, 1998, the Partnership purchased a 25% interest
     in  a parcel of land in Centerville, Ohio for $462,747.  The
     land is leased to Americana Dining Corporation (ADC) under a
     Lease  Agreement with a primary term of 20 years and  annual
     rental   payments  of  $32,392.   Simultaneously  with   the
     purchase  of  the  land,  the  Partnership  entered  into  a
     Development  Financing Agreement under which the Partnership
     will  advance funds to ADC for the construction of a Champps
     Americana  restaurant  on the site.  Through  September  30,
     1998,   the  Partnership  had  advanced  $92,791   for   the
     construction  of the property and was charging  interest  on
     the advances at a rate of 7.0%.  The Partnership's share  of
     the  total  purchase price, including the cost of the  land,
     will be approximately $1,058,750.  After the construction is
     complete,  the  Lease Agreement will be amended  to  require
     annual  rental  payments  of  approximately  $109,000.   The
     remaining  interests in the property are owned by  AEI  Real
     Estate  Fund XVII Limited Partnership, AEI Real Estate  Fund
     XVIII Limited Partnership, and AEI Income & Growth Fund XXII
     Limited Partnership, affiliates of the Partnership.
     
                                
        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)
                                
(3)  Investments in Real Estate - (Continued)

     Through September 30, 1998, the Partnership sold 40.7615% of
     its   interest  in  the  Champps  Americana  restaurant   in
     Columbus,  Ohio, in six separate transactions  to  unrelated
     third  parties.   The Partnership received  total  net  sale
     proceeds of $1,383,508 which resulted in a total net gain of
     $341,928.    The   total   cost  and   related   accumulated
     depreciation  of  the  interests  sold  was  $1,087,502  and
     $45,922,  respectively.  For the nine months ended September
     30,  1998  and 1997, the net gain was $235,377 and  $42,582,
     respectively.
     
     During  the  first  nine  months  of  1998  and  1997,   the
     Partnership  distributed $348,252 and $109,810  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  $14.47  and  $7.87  per   Limited
     Partnership  Unit,  respectively.  The  remaining  net  sale
     proceeds  will either be reinvested in additional properties
     or distributed to the Partners in the future.
     
     The  Partnership has incurred net costs of $433,345 relating
     to  the review of potential property acquisitions.  Of these
     costs, $383,011 have been capitalized and allocated to land,
     building and equipment.  The remaining costs of $50,334 have
     been   capitalized  and  will  be  allocated   to   property
     acquisitions in future periods.
     
(4)  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

Results of Operations

       For the nine months ended September 30, 1998 and 1997, the
Partnership recognized rental income of $1,247,467 and  $698,606,
respectively.   During the same periods, the  Partnership  earned
$140,616  and $399,667, respectively, in investment  income  from
subscriptions proceeds and sale proceeds which were  invested  in
short-term  money market accounts, commercial paper  and  federal
agency  notes.  This investment income constituted  10%  and  36%
respectively, of total income for the periods.  The percentage of
total  income  represented  by  investment  income  declines   as
subscription proceeds are invested in properties.


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

        Musicland Group, Inc. (MGI), the lessee of the Media Play
retail  store  in  Apple Valley, Minnesota experienced  financial
difficulties and was aggressively restructuring its organization.
As  part of the restructuring, the Partnership and MGI reached an
agreement  in  December, 1996 in which  MGI  would  buy  out  and
terminate  the Lease Agreement by making a payment  of  $800,000,
which   is   equal  to  approximately  two  years'   rent.    The
Partnership's  share  of such payment was  $272,000.   Under  the
Agreement,  MGI  remained  in  possession  of  the  property  and
performed  all  of its obligations under the net lease  agreement
through  January 31, 1997 at which time it vacated  the  property
and  made  it  available for re-let to another tenant.   MGI  was
responsible  for  all  maintenance and management  costs  of  the
property   through  January  31,  1997  after  which   date   the
Partnership   became  responsible  for  its  share  of   expenses
associated  with  the property until it is  re-let  or  sold.   A
specialist  in commercial property leasing has been  retained  to
locate a new tenant for the property.

        As  of  December 31, 1997, based on an analysis of market
conditions in the area, it was determined the fair value  of  the
Partnership's  interest  in  the  Media  Play  was  approximately
$748,000.   In the fourth quarter of 1997, a charge to operations
for  real estate impairment of $580,200 was recognized, which  is
the  difference between the book value at December  31,  1997  of
$1,328,200  and  the  estimated market value  of  $748,000.   The
charge  was  recorded against the cost of the land, building  and
equipment.

        During the nine months ended September 30, 1998 and 1997,
the  Partnership  paid  Partnership  administration  expenses  to
affiliated parties of $187,294 and $173,033, respectively.  These
administration  expenses  include  initial  start-up  costs   and
expenses  associated  with  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  $94,495 and $82,729, respectively.   These  expenses
represent  direct payments to third parties for legal and  filing
fees,  direct administrative costs, outside audit and  accounting
costs,  insurance  and other property  costs.   The  increase  in
these  expenses in 1998, when compared to 1997, is the result  of
expenses  incurred  in 1998 related to the Media  Play  situation
discussed above.

        The  Partnership distributes all of its net income during
the  offering  and  acquisition phases, and if net  income  after
deductions  for  depreciation  is  not  sufficient  to  fund  the
distributions,  the  Partnership may distribute  other  available
cash that constitutes capital for accounting purposes.

         As   of  September  30,  1998,  the  Partnership's  cash
distribution rate was 8.0% on an annualized basis.  Distributions
of  Net Cash Flow to the General Partners are 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.   The  Leases contain cost of living increases  which
will result in an increase in rental income over the term of  the
Leases.   Inflation also may cause the Partnership's real  estate
to  appreciate in value.  However, inflation and changing  prices
may  also have an adverse impact on the operating margins of  the
properties' tenants which could impair their ability to pay  rent
and subsequently reduce the Partnership's Net Cash Flow available
for distributions.


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

        AEI  Fund  Management, Inc. (AEI) performs all management
services  for  the Partnership.  AEI is currently  analyzing  its
computer hardware and software systems to determine what, if any,
resources  need to be dedicated regarding Year 2000 issues.   The
Partnership  does  not  anticipate  any  significant  operational
impact  or  incurring material costs as a result of AEI  becoming
Year 2000 compliant.

Liquidity and Capital Resources

       The Partnership's primary sources of cash will be proceeds
from  the  sale  of Units, investment income, rental  income  and
proceeds  from the sale of property.  Its primary  uses  of  cash
will  be  investment  in  real properties,  payment  of  expenses
involved  in  the  sale  of  units,  the  organization   of   the
Partnership, the management of properties, the administration  of
the Partnership, and the payment of distributions.

         Until   the   offering  of  Units  was  completed,   the
Partnership's primary source of cash flow was from  the  sale  of
Limited  Partnership Units.  The Partnership offered for sale  up
to  $24,000,000  of limited partnership interests  (the  "Units")
(24,000  Units  at  $1,000 per Unit) pursuant to  a  registration
statement effective February 1, 1995.  From FebruaryE1,  1995  to
AprilE14,  1995, the minimum number of Limited Partnership  Units
(1,500) needed to form the Partnership were sold and on April 14,
1995,  a  total of 2,937.444 Units ($2,937,444) were  transferred
into  the  Partnership.   On January 31,  1997,  the  Partnership
offering terminated when the maximum subscription limit of 24,000
Limited  Partnership  Units  ($24,000,000)  was  reached.    From
subscription  proceeds,  the Partnership  paid  organization  and
syndication  costs (which constitute a reduction of  capital)  of
$3,277,000.

        Before  the  acquisition of properties,  cash  flow  from
operating  activities  is  not significant.   Net  income,  after
adjustment for depreciation, is lower during the first few  years
of  operations as administrative expenses remain high and a large
amount  of the Partnership's assets remain invested on  a  short-
term  basis in lower-yielding cash equivalents.  Net income  will
become   the  largest  component  of  cash  flow  from  operating
activities  and  the  largest component of cash  flow  after  the
completion of the acquisition phase.

        The Partnership Agreement requires that all proceeds from
the  sale  of  Units be invested or committed  to  investment  in
properties  by  the  later of two years after  the  date  of  the
Prospectus or six months after termination of the offer and  sale
of  Units.  While the Partnership is purchasing properties,  cash
flow from investing activities (investment in real property) will
remain  negative  and will constitute the principal  use  of  the
Partnership's available cash flow.

        On March 14, 1997, the Partnership purchased a parcel  of
land in San Antonio, Texas for $1,032,299.  The land is leased to
Champps Americana, Inc. (Champps) under a Lease Agreement with  a
primary  term of 20 years and annual rental payments of  $83,451.
Effective  September 9, 1997, the annual rent  was  increased  to
$128,156.   Simultaneously with the purchase  of  the  land,  the
Partnership entered into a Development Financing Agreement  under
which   the  Partnership  advanced  funds  to  Champps  for   the
construction  of  a  Champps Americana restaurant  on  the  site.
Initially, the Partnership charged interest on the advances at  a
rate of 7.0%.  Effective September 9, 1997, the interest rate was
increased to 10.75%.  On December 23, 1997, after the development
was  completed, the Lease Agreement was amended to require annual
rental  payments of $296,023.  Total acquisition costs, including
the cost of the land, were $2,833,357.


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

        On  March  19, 1997, the Partnership purchased a  Denny's
restaurant in Covington, Louisiana for $1,304,949.  The  property
is  leased  to Huntington Restaurants Group, Inc. under  a  Lease
Agreement  with  a  primary term of 20 years  and  annual  rental
payments of $141,243.

        On  April  21,  1997, the Partnership purchased  a  49.6%
interest  in  a  parcel  of  land  in  Schaumburg,  Illinois  for
$876,387.   The land is leased to Champps under a Lease Agreement
with  a  primary term of 20 years and annual rental  payments  of
$66,906.   Effective  October  17,  1997,  the  annual  rent  was
increased to $102,749.  Simultaneously with the purchase  of  the
land,  the  Partnership  entered  into  a  Development  Financing
Agreement  under which the Partnership advanced funds to  Champps
for  the  construction of a Champps Americana restaurant  on  the
site.   Initially,  the  Partnership  charged  interest  on   the
advances  at  a  rate of 7.0%.  Effective October 17,  1997,  the
interest  rate  was increased to 10.75%.  On December  31,  1997,
after  the  development was completed, the  Lease  Agreement  was
amended  to  require  annual rental payments  of  $236,479.   The
Partnership's share of the total acquisition costs, including the
cost of the land, was $2,256,462.  The remaining interests in the
property  are  owned by AEI Net Lease Income  &  Growth  Fund  XX
Limited  Partnership  and Net Lease Income  &  Growth  Fund  84-A
Limited Partnership, affiliates of the Partnership.

        On  July  8, 1997, the Partnership purchased a parcel  of
land in Livonia, Michigan for $1,074,384.  The land is leased  to
Champps  under a Lease Agreement with a primary term of 20  years
and  annual  rental  payments of $75,207.  Effective  January  3,
1998,  the annual rent was increased to $115,496.  Simultaneously
with  the  purchase of the land, the Partnership entered  into  a
Development  Financing  Agreement  under  which  the  Partnership
advanced  funds  to  Champps for the construction  of  a  Champps
Americana  restaurant  on the site.  Initially,  the  Partnership
charged  interest on the advances at a rate of  7.0%.   Effective
January  3, 1998, the interest rate was increased to 10.75%.   On
May  19,  1998,  after the development was completed,  the  Lease
Agreement  was  amended  to  require annual  rental  payments  of
$429,135.   Total acquisition costs, including the  cost  of  the
land, were $4,110,406.

        On  July  31,  1997, the Partnership  purchased  a  93.1%
interest  in a Caribou Coffee store in Charlotte, North  Carolina
for  $1,310,598.   The  property  is  leased  to  Caribou  Coffee
Company, Inc. under a Lease Agreement with a primary term  of  18
years  and  annual  rental payments of $146,438.   The  remaining
interest in the property is owned by AEI Institutional Net  Lease
Fund '93 Limited Partnership, an affiliate of the Partnership.

        On  August  28,  1998, the Partnership  purchased  a  14%
interest  in a parcel of land in Centerville, Ohio for  $259,138.
The land is leased to Americana Dining Corporation (ADC) under  a
Lease Agreement with a primary term of 20 years and annual rental
payments  of  $18,140.  Simultaneously with the purchase  of  the
land,  the  Partnership  entered  into  a  Development  Financing
Agreement under which the Partnership will advance funds  to  ADC
for  the  construction of a Champps Americana restaurant  on  the
site.   Through September 30, 1998, the Partnership had  advanced
$51,963  for  the construction of the property and  was  charging
interest  on  the advances at a rate of 7.0%.  The  Partnership's
share  of  the total purchase price, including the  cost  of  the
land, will be approximately $592,900.  After the construction  is
complete,  the Lease Agreement will be amended to require  annual
rental  payments  of approximately $61,000.  The Partnership  has
incurred  net costs of $6,375 related to the acquisition  of  the
property.   The costs have been capitalized and will be allocated
to  land, building and equipment.  The remaining interests in the
property  are  owned  by  AEI  Real  Estate  Fund  XVIII  Limited
Partnership, AEI Income & Growth Fund XXI Limited Partnership and
AEI Income & Growth Fund XXII Limited Partnership, affiliates  of
the Partnership.


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

        Through September 30, 1998, the Partnership sold 40.7615%
of  its interest in the Champps Americana restaurant in Columbus,
Ohio,  in  six separate transactions to unrelated third  parties.
The  Partnership received total net sale proceeds  of  $1,383,508
which  resulted in a total net gain of $341,928.  The total  cost
and  related accumulated depreciation of the interests  sold  was
$1,087,502 and $45,922, respectively.  For the nine months  ended
SeptemberE30,  1998  and  1997, the net  gain  was  $235,377  and
$42,582, respectively.

        During  the  first  nine months of  1998  and  1997,  the
Partnership  distributed $348,252 and $109,810 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  $14.47  and  $7.87  per  Limited  Partnership  Unit,
respectively.   The remaining net sale proceeds  will  either  be
reinvested  in  additional  properties  or  distributed  to   the
Partners in the future.

         After   completion   of  the  acquisition   phase,   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.   The  redemption
payments  generally are funded with cash that would  normally  be
paid  as  part  of  the  regular quarterly distributions.   As  a
result,  total  distributions  and  distributions  payable   have
fluctuated  from year to year due to cash used to fund redemption
payments.

        The  Partnership may acquire Units from Limited  Partners
who  have tendered their Units to the Partnership. Such Units may
be  acquired at a discount.  The Partnership is not obligated  to
purchase  in  any  year  more than 5%  of  the  number  of  Units
outstanding at the beginning of the year.  In no event shall  the
Partnership  be  obligated to purchase  Units  if,  in  the  sole
discretion  of the Managing General Partner, such purchase  would
impair  the  capital or operation of the Partnership.   In  prior
years,   three  Limited  Partners  redeemed  a  total  of   171.1
Partnership  Units for $154,021.  The redemptions  increased  the
remaining   Limited   Partners'   ownership   interest   in   the
Partnership.

        Until  capital is invested in properties, the Partnership
will remain liquid.  At SeptemberE30, 1998, $853,229 or 5% of the
Partnership's assets were in cash or cash equivalents  (including
accrued  interest  receivable).   After  completion  of  property
acquisitions,  the Partnership will attempt to  maintain  a  cash
reserve  of  only  approximately  1%  of  subscription  proceeds.
Because properties are purchased for cash and leased under triple-
net   leases,  this  is  considered  adequate  to  satisfy   most
contingencies.


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

Cautionary Statement for Purposes of the "Safe Harbor" Provisions
of the Private Securities Litigation Reform Act of 1995

         The   foregoing  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:

<bullet>  Market  and economic conditions which affect the  value
          of  the  properties the Partnership owns and  the  cash
          from rental income such properties generate;
       
<bullet>  the  federal income tax consequences of rental  income,
          deductions,  gain  on  sales and other  items  and  the
          affects of these consequences for investors;
       
<bullet>  resolution  by  the General Partners of conflicts  with
          which they may be confronted;
       
<bullet>  the   success  of  the  General  Partners  of  locating
          properties with favorable risk return characteristics;
       
<bullet>  the effect of tenant defaults; and
       
<bullet>  the condition of the industries in which the tenants of
          properties owned by the Partnership operate.


                   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  Purchase  Agreement dated  July  28,
                1998  between  the  Partnership  and  Tall
                Pines  Farm  Limited Partnership  relating
                to  the  property at 161  E.  Campus  View
                Boulevard, Columbus, Ohio.

          10.2  Assignment   of   the   Development
                Financing   Agreement   and   Net    Lease
                Agreement  dated August 27,  1998  between
                the  Partnership,  AEI  Real  Estate  Fund
                XVII  Limited Partnership, AEI Real Estate
                Fund   XVIII   Limited  Partnership,   AEI
                Income   &   Growth  Fund   XXII   Limited
                Partnership,    and    Americana    Dining
                Corporation  relating to the  property  at
                7880     Washington     Village     Drive,
                Centerville, Ohio.

          10.3  Development   Financing   Agreement
                dated  June 29, 1998 between AEI Income  &
                Growth  Fund XXII Limited Partnership  and
                Americana  Dining Corporation relating  to
                the  property  at 7880 Washington  Village
                Drive, Centerville, Ohio.

          10.4  Net  Lease Agreement dated June  29,
                1998  between  AEI Income  &  Growth  Fund
                XXII  Limited  Partnership  and  Americana
                Dining   Corporation   relating   to   the
                property   at   7880  Washington   Village
                Drive, Centerville, Ohio.

           27   Financial Data Schedule  for  period
                ended September 30, 1998.

       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 9, 1998      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)