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

                            FORM 10-Q

        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
             OF THE SECURITIES EXCHANGE ACT OF 1934

       For the quarterly period ended:  September 30, 2010

               Commission File Number:  000-29274

           AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
     (Exact name of registrant as specified in its charter)

       State of Minnesota                  41-1789725
(State or other jurisdiction of         (I.R.S. Employer
incorporation or organization)        Identification No.)

    30 East 7th Street, Suite 1300, St. Paul, Minnesota 55101
             (Address of principal executive offices)

                          (651) 227-7333
                 (Registrant's telephone number)

                         Not Applicable
 (Former name, former address and former fiscal year, if changed
                       since last report)

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

Indicate  by  check  mark  whether the registrant  has  submitted
electronically  and posted on its corporate  Web  site,  if  any,
every  Interactive Data File required to be submitted and  posted
pursuant  to Rule 405 of Regulation S-T (232.405 of this chapter)
during  the preceding 12 months (or for such shorter period  that
the registrant was required to submit and post such files).
                                                [ ] Yes    [ ] No

Indicate  by  check  mark  whether  the  registrant  is  a  large
accelerated filer, an accelerated filer, a non-accelerated filer,
or  a  smaller reporting company.  See the definitions of  "large
accelerated  filer," "accelerated filer" and  "smaller  reporting
company" in Rule 12b-2 of the Exchange Act.

  Large accelerated filer [ ]        Accelerated filer [ ]

  Non-accelerated filer [ ]          Smaller reporting company [X]

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


        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP

                              INDEX


Part I - Financial Information

 Item 1. Financial Statements (unaudited):

         Balance Sheet as of September 30, 2010 and December 31, 2009

         Statements for the Periods ended September 30, 2010 and 2009:

           Income

           Cash Flows

           Changes in Partners' Capital

         Notes to Financial Statements

 Item 2. Management's Discussion and Analysis of Financial Condition
           and Results of Operations

 Item 3. Quantitative and Qualitative Disclosures About Market Risk

 Item 4. Controls and Procedures

Part II - Other Information

 Item 1. Legal Proceedings

 Item 1A. Risk Factors

 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 Item 3. Defaults Upon Senior Securities

 Item 5. Other Information

 Item 6. Exhibits

         Signatures

<PAGE>
        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
                          BALANCE SHEET
            SEPTEMBER 30, 2010 AND DECEMBER 31, 2009

                             ASSETS

                                                     2010          2009
CURRENT ASSETS:
  Cash                                          $ 2,053,112    $ 1,008,743
  Receivables                                             0         10,734
                                                 -----------    -----------
      Total Current Assets                        2,053,112      1,019,477
                                                 -----------    -----------
INVESTMENTS IN REAL ESTATE:
  Land                                            4,124,903      4,124,903
  Buildings and Equipment                        11,148,077     11,148,077
  Accumulated Depreciation                       (1,838,290)    (1,503,853)
                                                 -----------    -----------
                                                 13,434,690     13,769,127
  Real Estate Held for Sale                       1,324,858      2,173,147
                                                 -----------    -----------
      Net Investments in Real Estate             14,759,548     15,942,274
                                                 -----------    -----------
          Total Assets                          $16,812,660    $16,961,751
                                                 ===========    ===========

                      LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
  Payable to AEI Fund Management, Inc.          $    16,883    $    56,124
  Distributions Payable                             294,947        294,947
  Unearned Rent                                      68,700         43,649
                                                 -----------    -----------
      Total Current Liabilities                     380,530        394,720
                                                 -----------    -----------
PARTNERS' CAPITAL:
  General Partners                                    2,631          1,319
  Limited Partners, $1,000 per Unit;
      24,000 Units authorized and issued;
      22,779 Units outstanding                   16,429,499     16,565,712
                                                 -----------    -----------
      Total Partners' Capital                    16,432,130     16,567,031
                                                 -----------    -----------
        Total Liabilities and Partners' Capital $16,812,660    $16,961,751
                                                 ===========    ===========


 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


                                 Three Months Ended     Nine Months Ended
                                9/30/10      9/30/09   9/30/10      9/30/09

RENTAL INCOME                 $ 296,318    $ 280,015   $ 892,937   $ 796,585

EXPENSES:
  Partnership Administration -
    Affiliates                   57,350       56,057     170,165     169,666
  Partnership Administration
    and Property Management -
    Unrelated Parties             7,273        5,926      28,972      28,819
  Depreciation                  111,479      105,047     334,437     300,631
                               ---------    ---------   ---------   ---------
      Total Expenses            176,102      167,030     533,574     499,116
                               ---------    ---------   ---------   ---------

OPERATING INCOME                120,216      112,985     359,363     297,469

OTHER INCOME:
  Interest Income                 4,459       11,452      10,833      51,106
                               ---------    ---------   ---------   ---------
INCOME FROM CONTINUING
   OPERATIONS                   124,675      124,437     370,196     348,575

Income (Loss) from
  Discontinued Operations       137,611      (28,563)    379,746    (300,279)
                               ---------    ---------   ---------   ---------
NET INCOME                    $ 262,286    $  95,874   $ 749,942   $  48,296
                               =========    =========   =========   =========
NET INCOME ALLOCATED:
  General Partners            $   3,891    $     959   $  10,161   $     483
  Limited Partners              258,395       94,915     739,781      47,813
                               ---------    ---------   ---------   ---------
                              $ 262,286    $  95,874   $ 749,942   $  48,296
                               =========    =========   =========   =========
INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT:
  Continuing Operations       $    5.42    $    5.41   $   16.09   $   15.15
  Discontinued Operations          5.92        (1.24)      16.39      (13.05)
                               ---------    ---------   ---------   ---------
      Total                   $   11.34    $    4.17   $   32.48   $    2.10
                               =========    =========   =========   =========
Weighted Average Units Outstanding -
  Basic and Diluted              22,779       22,779      22,779      22,779
                               =========    =========   =========   =========

 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 NINE MONTHS ENDED SEPTEMBER 30


                                                     2010          2009

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net Income                                     $   749,942   $    48,296

  Adjustments to Reconcile Net Income to Net Cash
  Provided by Operating Activities:
     Depreciation                                    334,437       308,215
     Real Estate Impairment                                0       606,839
     Gain on Sale of Real Estate                    (253,923)     (135,884)
     Decrease in Receivables                          10,734         5,032
     Increase (Decrease) in Payable to
        AEI Fund Management, Inc.                    (39,241)       12,979
     Increase in Unearned Rent                        25,051        39,033
                                                  -----------   -----------
       Total Adjustments                              77,058       836,214
                                                  -----------   -----------
       Net Cash Provided By
          Operating Activities                       827,000       884,510
                                                  -----------   -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Investments in Real Estate                               0    (1,200,332)
  Proceeds from Sale of Real Estate                1,102,212       329,208
                                                  -----------   -----------
       Net Cash Provided By (Used For)
          Investing Activities                     1,102,212      (871,124)
                                                  -----------   -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Distributions Paid to Partners                    (884,843)     (936,121)
                                                  -----------   -----------

NET INCREASE (DECREASE) IN CASH                    1,044,369      (922,735)

CASH, beginning of period                          1,008,743     2,068,293
                                                  -----------   -----------
CASH, end of period                              $ 2,053,112   $ 1,145,558
                                                  ===========   ===========
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES:
    Capitalized Construction Costs
    Payable at Period End                        $         0   $    77,235
                                                  ===========   ===========

 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 NINE MONTHS ENDED SEPTEMBER 30


                                                                   Limited
                                                                 Partnership
                             General     Limited                    Units
                             Partners    Partners      Total     Outstanding


BALANCE, December 31, 2008  $12,901    $17,520,516  $17,533,417    22,779.11

  Distributions Declared     (8,788)      (869,998)    (878,786)

  Net Income                    483         47,813       48,296
                             -------    -----------  -----------  -----------
BALANCE, September 30, 2009 $ 4,596    $16,698,331  $16,702,927    22,779.11
                             =======    ===========  ===========  ===========


BALANCE, December 31, 2009  $ 1,319    $16,565,712  $16,567,031    22,779.11

  Distributions Declared     (8,849)      (875,994)    (884,843)

  Net Income                 10,161        739,781      749,942
                             -------    -----------  -----------  -----------
BALANCE, September 30, 2010 $ 2,631    $16,429,499  $16,432,130    22,779.11
                             =======    ===========  ===========  ===========


 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, 2010

(1)  The  condensed  statements included herein have been  prepared
     by  the  registrant, 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  registrant
     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
     registrant's latest annual report on Form 10-K.

(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 director of  AFM,  serves  as  the
     Individual   General  Partner.   AFM  is  a   wholly   owned
     subsidiary  of AEI Capital Corporation of which Mr.  Johnson
     is  the  majority  shareholder.  AEI Fund  Management,  Inc.
     ("AEI"),  an  affiliate of AFM, performs the  administrative
     and operating functions for the Partnership.

     The   terms  of  the  Partnership  offering  called  for   a
     subscription  price of $1,000 per Limited Partnership  Unit,
     payable   on  acceptance  of  the  offer.   The  Partnership
     commenced   operations  on  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
                           (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.

        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)

(3)  Investments in Real Estate -

     On  November  21,  2008,  the Partnership  purchased  a  63%
     interest in a parcel of land in Rapid City, South Dakota for
     $576,274.  The Partnership obtained title to the land in the
     form of an undivided fee simple interest in the 63% interest
     purchased.  Simultaneous with the purchase of the land,  the
     Partnership  entered into a Development Financing  Agreement
     under which the Partnership advanced funds to Brad and  Dad,
     LLC  for the construction of a Tractor Supply Company  store
     on   the  site.   The  Partnership's  share  of  the   total
     acquisition  costs,  including the cost  of  the  land,  was
     $1,957,734.   The  remaining interest in  the  property  was
     purchased  by AEI Income & Growth Fund 27 LLC, an  affiliate
     of the Partnership.

     The  property  is leased to Tractor Supply Company  under  a
     Lease  Agreement with a primary term of 15 years and initial
     annual   rent  of  $141,750  for  the  interest   purchased.
     Pursuant to the Lease, the tenant commenced paying  rent  on
     August  6,  2009,  the  day the store opened  for  business.
     Pursuant  to  the Development Financing Agreement,  for  the
     period  from November 21, 2008 to August 5, 2009,  Brad  and
     Dad, LLC paid the Partnership interest at a rate of 6.9%  on
     the  purchase price of the land and the amounts advanced for
     construction  of the building.  Pursuant to the  Lease,  any
     improvements to the land during the term of the Lease become
     the property of the Partnership.

     On  October  20,  2010,  the  Partnership  purchased  a  39%
     interest in a Scott & White Clinic in College Station, Texas
     for  $1,433,468.  The property is leased to  Scott  &  White
     Healthcare under a Lease Agreement with a remaining  primary
     term  of  9.7 years and initial annual rent of $120,120  for
     the  interest  purchased.  The remaining  interests  in  the
     property  were  purchased by AEI Net Lease Income  &  Growth
     Fund XX Limited Partnership and AEI Income & Growth Fund  25
     LLC, affiliates of the Partnership.

(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.

(5)  Discontinued Operations -

     On  May 28, 2009, the Partnership sold its remaining 1.1839%
     interest in the Johnny Carino's restaurant in Austin,  Texas
     to  an unrelated third party.  The Partnership received  net
     sale  proceeds of $22,722, which resulted in a net  loss  of
     $210.  The cost and related accumulated depreciation of  the
     interest sold was $27,083 and $4,151, respectively.

     On  September 3, 2009, the Partnership sold 14.0515% of  the
     KinderCare  daycare  center  in  Ballwin,  Missouri  to   an
     unrelated  third party.  The Partnership received  net  sale
     proceeds  of  $306,486, which resulted  in  a  net  gain  of
     $136,094.  The cost and related accumulated depreciation  of
     the interest sold was $213,271 and $42,879, respectively.


        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)

(5)  Discontinued Operations - (Continued)

     During  the first nine months of 2010, the Partnership  sold
     an  additional 33.6699% of the KinderCare daycare center  in
     Ballwin,  Missouri,  in  three  separate  transactions,   to
     unrelated third parties.  The Partnership received total net
     sale  proceeds of $674,196, which resulted in a net gain  of
     $265,907.  The cost and related accumulated depreciation  of
     the  interests sold was $511,034 and $102,745, respectively.
     The Partnership is attempting to sell its remaining 44.5116%
     interest  in  the  property.   At  September  30,  2010  and
     December  31,  2009,  the property was  classified  as  Real
     Estate  Held for Sale with a carrying value of $539,759  and
     $948,048, respectively.

     The  Partnership is attempting to sell its 20.4025% interest
     in  the  Winn-Dixie  store  in  Panama  City,  Florida.   At
     September  30, 2010 and December 31, 2009, the property  was
     classified  as  Real Estate Held for Sale  with  a  carrying
     value of $785,099.

     In   March  2009,  Tumbleweed,  Inc.,  the  tenant  of   the
     Tumbleweed  restaurant  in  Fort Wayne,  Indiana  filed  for
     Chapter 11 bankruptcy reorganization.  Tumbleweed closed the
     restaurant and filed a motion with the bankruptcy  court  to
     reject the Lease for this property.  The court approved  the
     motion and Tumbleweed returned possession of the property to
     the  Partnership.  The Partnership listed the  property  for
     sale  with  a  real  estate broker in the Fort  Wayne  area.
     While   the   property  was  vacant,  the  Partnership   was
     responsible for real estate taxes and other costs associated
     with  maintaining  the property.  Based on  an  analysis  of
     market  conditions  in the area, the Partnership  determined
     the  property  was  impaired.  As a  result,  in  the  first
     quarter  of  2009, a charge to discontinued  operations  for
     real estate impairment of $396,839 was recognized, which was
     the  difference between the carrying value at March 31, 2009
     of  $1,046,839  and  the estimated fair value  of  $650,000.
     Based on marketing efforts and an updated analysis of market
     conditions  in  the  area,  the  Partnership  recognized  an
     additional  real estate impairment of $210,000  to  decrease
     the  carrying value to the estimated fair value of  $440,000
     as of September 30, 2009.  The charges were recorded against
     the cost of the land and building.

     In  December 2009, the Partnership entered into an agreement
     to  sell  the  Tumbleweed restaurant to an  unrelated  third
     party.   On  March  12,  2010,  the  sale  closed  with  the
     Partnership  receiving net sale proceeds of $428,016,  which
     resulted  in a net loss of $11,984.  At December  31,  2009,
     the property was classified as Real Estate Held for Sale.

     During  the  first  nine  months  of  2010  and  2009,   the
     Partnership  distributed net sale proceeds  of  $54,387  and
     $51,320 to the Limited and General Partners as part of their
     quarterly  distributions,  which  represented  a  return  of
     capital  of  $2.36  and $2.23 per Limited Partnership  Unit,
     respectively.  The Partnership anticipates the remaining net
     sale  proceeds  will  either  be  reinvested  in  additional
     property or distributed to the Partners in the future.

        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)

(5)  Discontinued Operations - (Continued)

     The financial results for these properties are reflected  as
     Discontinued   Operations  in  the  accompanying   financial
     statements.   The following are the results of  discontinued
     operations for the periods ended September 30:

                                 Three Months Ended     Nine Months Ended
                                9/30/10      9/30/09   9/30/10     9/30/09

 Rental Income                 $  39,603    $  56,256  $ 132,695   $ 225,230
 Property Management Expenses      2,679      (10,913)    (6,872)    (46,970)
 Depreciation                          0            0          0      (7,584)
 Real Estate Impairment                0     (210,000)         0    (606,839)
 Gain on Disposal of Real Estate  95,329      136,094    253,923     135,884
                                ---------    ---------  ---------   ---------
 Income (Loss) from
   Discontinued Operations     $ 137,611    $ (28,563) $ 379,746   $(300,279)
                                =========    =========  =========   =========

(6)  Fair Value Measurements -

     Fair  value, as defined by United States Generally  Accepted
     Accounting  Principles ("US GAAP"), is the price that  would
     be received to sell an asset or paid to transfer a liability
     in an orderly transaction between market participants at the
     measurement  date  in  the principal  or  most  advantageous
     market.  US GAAP establishes a hierarchy in determining  the
     fair  value  of  an  asset  or liability.   The  fair  value
     hierarchy  has  three levels of inputs, both observable  and
     unobservable. US GAAP requires the utilization of the lowest
     possible  level  of input to determine fair value.  Level  1
     inputs include quoted market prices in an active market  for
     identical assets or liabilities.  Level 2 inputs are  market
     data,  other than Level 1 inputs, that are observable either
     directly or indirectly. Level 2 inputs include quoted market
     prices  for  similar  assets or liabilities,  quoted  market
     prices   in   an  inactive  market,  and  other   observable
     information that can be corroborated by market data. Level 3
     inputs  are  unobservable and corroborated by little  or  no
     market data.

     The  Tumbleweed  restaurant,  with  a  carrying  amount   of
     $1,046,839  at  March  31, 2009, was  written  down  to  its
     estimated fair value of $650,000 after completing our  long-
     lived  asset  valuation analysis.  The resulting  impairment
     charge  of  $396,839 was included in earnings for the  first
     quarter  of  2009.  At September 30, 2009, after  completing
     our  long-lived  asset  valuation analysis,  the  Tumbleweed
     restaurant  was  further  written  down  to  $440,000,   its
     estimated fair value at that date.  The resulting impairment
     charge  of  $210,000 was included in earnings for the  third
     quarter of 2009.  In both instances, the fair value  of  the
     property   was  based  upon  comparable  sales  of   similar
     properties,  which  are considered Level  2  inputs  in  the
     valuation  hierarchy.  The property was sold  on  March  12,
     2010.

     At  September  30, 2010, the Partnership had  no  assets  or
     liabilities measured at fair value on a recurring  basis  or
     nonrecurring basis.


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

        This  section contains "forward-looking statements" 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, the
sufficiency  of  cash  to  meet  operating  expenses,  rates   of
distribution,  and  other  matters.  These,  and  other  forward-
looking  statements,  should 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
     effects 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.

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.

        Prior  to  January  1,  2009, the  Partnership  purchased
properties and recorded them in the financial statements at  cost
(including  capitalized acquisition expenses).  For  acquisitions
completed  on  or  after  January  1,  2009,  acquisition-related
transaction costs will be expensed as incurred as a result of the
Partnership  adopting new guidance on business combinations  that
expands  the  scope  of acquisition accounting.  The  Partnership
tests long-lived assets for recoverability when events or changes
in  circumstances  indicate that the carrying value  may  not  be
recoverable.   For  properties  the  Partnership  will  hold  and
operate, management determines whether impairment has occurred by
comparing the property's probability-weighted future undiscounted
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.   Changes  in  these assumptions  or  analysis  may  cause
material changes in the carrying value of the properties.

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

        AEI  Fund Management, Inc. allocates expenses to each  of
the  funds  they manage primarily on the basis of the  number  of
hours  devoted  by their employees to each fund's affairs.   They
also  allocate  expenses at the end of each month  that  are  not
directly related to a fund's operations based upon the number  of
investors  in the fund and the fund's capitalization relative  to
other  funds  they  manage.   The  Partnership  reimburses  these
expenses  subject  to  detailed  limitations  contained  in   the
Partnership Agreement.

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

Results of Operations

       For the nine months ended September 30, 2010 and 2009, the
Partnership  recognized rental income from continuing  operations
of  $892,937 and $796,585, respectively.  In 2010, rental  income
increased  mainly  due  to  additional  rent  received  from  one
property acquisition in 2009 and a rent increase on one property.

       For the nine months ended September 30, 2010 and 2009, the
Partnership  incurred  Partnership administration  expenses  from
affiliated parties of $170,165 and $169,666, respectively.  These
administration  expenses  include  costs  associated   with   the
management of the properties, processing distributions, reporting
requirements and communication with the Limited Partners.  During
the   same   periods,   the  Partnership   incurred   Partnership
administration  and property management expenses  from  unrelated
parties  of  $28,972 and $28,819, respectively.   These  expenses
represent  direct payments to third parties for legal and  filing
fees,  direct  administrative costs, outside audit costs,  taxes,
insurance and other property costs.

       For the nine months ended September 30, 2010 and 2009, the
Partnership  recognized interest income of $10,833  and  $51,106,
respectively.   In 2010, interest income decreased primarily  due
to  the  Partnership  receiving $40,189  of  interest  income  on
construction advances in 2009.

        Upon complete disposal of a property or classification of
a property as Real Estate Held for Sale, the Partnership includes
the  operating  results and sale of the property in  discontinued
operations.  In addition, the Partnership reclassifies the  prior
periods'  operating  results  of  the  property  to  discontinued
operations.   For the nine months ended September 30,  2010,  the
Partnership  recognized  income from discontinued  operations  of
$379,746,  representing  rental income less  property  management
expenses  of  $125,823 and a gain on disposal of real  estate  of
$253,923.   For  the nine months ended September  30,  2009,  the
Partnership  recognized  a loss from discontinued  operations  of
$300,279, representing a real estate impairment loss of $606,839,
which  was  partially  offset  by  rental  income  less  property
management expenses and depreciation of $170,676 and  a  gain  on
disposal of real estate of $135,884.

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

        On  May  28,  2009,  the Partnership sold  its  remaining
1.1839%  interest  in the Johnny Carino's restaurant  in  Austin,
Texas to an unrelated third party.  The Partnership received  net
sale  proceeds of $22,722, which resulted in a net loss of  $210.
The  cost  and  related accumulated depreciation of the  interest
sold was $27,083 and $4,151, respectively.

       On September 3, 2009, the Partnership sold 14.0515% of the
KinderCare  daycare center in Ballwin, Missouri to  an  unrelated
third  party.   The  Partnership received net  sale  proceeds  of
$306,486, which resulted in a net gain of $136,094.  The cost and
related  accumulated  depreciation  of  the  interest  sold   was
$213,271 and $42,879, respectively.

       During the first nine months of 2010, the Partnership sold
an  additional  33.6699%  of  the KinderCare  daycare  center  in
Ballwin,  Missouri, in three separate transactions, to  unrelated
third  parties.  The Partnership received total net sale proceeds
of  $674,196, which resulted in a net gain of $265,907.  The cost
and  related accumulated depreciation of the interests  sold  was
$511,034   and   $102,745,  respectively.   The  Partnership   is
attempting  to  sell  its  remaining  44.5116%  interest  in  the
property.   At  September  30, 2010 and December  31,  2009,  the
property  was  classified as Real Estate Held  for  Sale  with  a
carrying value of $539,759 and $948,048, respectively.

        The  Partnership  is  attempting  to  sell  its  20.4025%
interest  in  the Winn-Dixie store in Panama City,  Florida.   At
September  30,  2010  and  December 31, 2009,  the  property  was
classified as Real Estate Held for Sale with a carrying value  of
$785,099.

        In  March  2009,  Tumbleweed, Inc.,  the  tenant  of  the
Tumbleweed restaurant in Fort Wayne, Indiana filed for Chapter 11
bankruptcy reorganization.  Tumbleweed closed the restaurant  and
filed a motion with the bankruptcy court to reject the Lease  for
this  property.   The  court approved the motion  and  Tumbleweed
returned  possession  of the property to  the  Partnership.   The
Partnership  listed  the property for sale  with  a  real  estate
broker  in  the Fort Wayne area.  While the property was  vacant,
the  Partnership was responsible for real estate taxes and  other
costs  associated  with maintaining the property.   Based  on  an
analysis  of  market  conditions in  the  area,  the  Partnership
determined the property was impaired.  As a result, in the  first
quarter  of  2009, a charge to discontinued operations  for  real
estate  impairment  of  $396,839 was recognized,  which  was  the
difference  between  the carrying value  at  March  31,  2009  of
$1,046,839  and the estimated fair value of $650,000.   Based  on
marketing efforts and an updated analysis of market conditions in
the  area,  the Partnership recognized an additional real  estate
impairment  of  $210,000 to decrease the carrying  value  to  the
estimated  fair value of $440,000 as of September 30, 2009.   The
charges were recorded against the cost of the land and building.

         In  December  2009,  the  Partnership  entered  into  an
agreement to sell the Tumbleweed restaurant to an unrelated third
party.   On  March 12, 2010, the sale closed with the Partnership
receiving net sale proceeds of $428,016, which resulted in a  net
loss  of  $11,984.   At  December  31,  2009,  the  property  was
classified as Real Estate Held for Sale.

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

         Management  believes  inflation  has  not  significantly
affected  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.  Inflation also may cause the
real  estate  to  appreciate in value.   However,  inflation  and
changing  prices  may  have an adverse impact  on  the  operating
margins  of  the  properties' tenants, which could  impair  their
ability  to  pay rent and subsequently reduce the Net  Cash  Flow
available for distributions.

Liquidity and Capital Resources

        During  the  nine months ended September  30,  2010,  the
Partnership's cash balances increased $1,044,369 as a  result  of
cash  generated  from the sale of property, which  was  partially
offset  by distributions paid to the Partners in excess  of  cash
generated  from  operating activities.  During  the  nine  months
ended   September  30,  2009,  the  Partnership's  cash  balances
decreased $922,735 as a result of cash used to purchase property,
which  was  partially offset by cash generated from the  sale  of
property  and cash generated from operating activities in  excess
of distributions paid to the Partners.

        Net  cash provided by operating activities decreased from
$884,510 in 2009 to $827,000 in 2010 as a result of a decrease in
total   rental  and  interest  income  in  2010  and  net  timing
differences  in the collection of payments from the  tenants  and
the  payment  of  expenses,  which were  partially  offset  by  a
decrease  in  Partnership administration and property  management
expenses in 2010.

        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, 2010 and 2009, the Partnership generated cash  flow
from  the  sale  of  real  estate  of  $1,102,212  and  $329,208,
respectively.  During the nine months ended September  30,  2009,
the  Partnership expended $1,200,332 to invest in real properties
as  the Partnership reinvested cash generated from property sales
completed in 2008.

        On  November  21, 2008, the Partnership purchased  a  63%
interest  in  a  parcel of land in Rapid City, South  Dakota  for
$576,274.  The Partnership obtained title to the land in the form
of   an  undivided  fee  simple  interest  in  the  63%  interest
purchased.   Simultaneous  with the purchase  of  the  land,  the
Partnership entered into a Development Financing Agreement  under
which the Partnership advanced funds to Brad and Dad, LLC for the
construction of a Tractor Supply Company store on the site.   The
Partnership's share of the total acquisition costs, including the
cost of the land, was $1,957,734.  The remaining interest in  the
property  was purchased by AEI Income & Growth Fund  27  LLC,  an
affiliate of the Partnership.

        The property is leased to Tractor Supply Company under  a
Lease  Agreement  with  a primary term of 15  years  and  initial
annual rent of $141,750 for the interest purchased.  Pursuant  to
the  Lease, the tenant commenced paying rent on August  6,  2009,
the   day  the  store  opened  for  business.   Pursuant  to  the
Development Financing Agreement, for the period from November 21,
2008  to  August 5, 2009, Brad and Dad, LLC paid the  Partnership
interest at a rate of 6.9% on the purchase price of the land  and
the  amounts advanced for construction of the building.  Pursuant
to the Lease, any improvements to the land during the term of the
Lease become the property of the Partnership.


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

        On  October  20,  2010, the Partnership purchased  a  39%
interest in a Scott & White Clinic in College Station, Texas  for
$1,433,468.   The property is leased to Scott & White  Healthcare
under  a  Lease Agreement with a remaining primary  term  of  9.7
years  and  initial  annual  rent of $120,120  for  the  interest
purchased.    The  remaining  interests  in  the  property   were
purchased  by  AEI  Net  Lease Income & Growth  Fund  XX  Limited
Partnership  and AEI Income & Growth Fund 25 LLC,  affiliates  of
the Partnership.

        The  Partnership's primary use of cash flow,  other  than
investment   in  real  estate,  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.

       For the nine months ended September 30, 2010 and 2009, the
Partnership  declared  distributions of  $884,843  and  $878,786,
respectively, which were distributed 99% to the Limited  Partners
and  1%  to the General Partners.  The Limited Partners  received
distributions  of $875,994 and $869,998 and the General  Partners
received  distributions  of $8,849 and $8,788  for  the  periods,
respectively.

        During  the  first  nine months of  2010  and  2009,  the
Partnership distributed net sale proceeds of $54,387 and  $51,320
to  the  Limited and General Partners as part of their  quarterly
distributions, which represented a return of capital of $2.36 and
$2.23   per   Limited   Partnership  Unit,   respectively.    The
Partnership  anticipates the remaining  net  sale  proceeds  will
either be reinvested in additional property or distributed to the
Partners in the future.

        The  Partnership may acquire Units from Limited  Partners
who have tendered their Units to the Partnership.  Such Units may
be acquired at a discount.  The Partnership will not be obligated
to purchase in any year any number of Units that, when aggregated
with  all  other transfers of Units that have occurred since  the
beginning   of  the  same  calendar  year  (excluding   Permitted
Transfers as defined in the Partnership Agreement), would  exceed
5%  of the total number of Units outstanding on January 1 of such
year.  In no event shall the Partnership be obligated to purchase
Units if, in the sole discretion of the Managing General Partner,
such  purchase  would  impair the capital  or  operation  of  the
Partnership.    During  2010 and 2009, the  Partnership  did  not
redeem  any Units from the Limited Partners.  In prior  years,  a
total  of 60 Limited Partners redeemed 1,220.89 Partnership Units
for  $958,469.   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 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)

The Economy and Market Conditions

       The impact of conditions in the current economy, including
the  turmoil  in the credit markets, has adversely affected  many
real  estate investment funds.  However, the absence of  mortgage
financing on the Partnership's properties eliminates the risks of
foreclosure and debt-refinancing that can negatively  impact  the
value  and  distributions  of leveraged  real  estate  investment
funds.  Nevertheless, a prolonged economic downturn may adversely
affect the operations of the Partnership's tenants and their cash
flows.  If a tenant were to default on its lease obligations, the
Partnership's  income  would decrease,  its  distributions  would
likely be reduced and the value of its properties might decline.

        Historically,  the Partnership has sold properties  at  a
gain  and  distributed the gain proceeds as part of  its  regular
quarterly  distributions,  and to make special  distributions  on
occasion.   The  remaining  sales  proceeds  were  reinvested  in
additional properties.  Beginning in the fourth quarter of  2008,
general  economic conditions caused the volume of property  sales
to  slow dramatically for all real estate sellers.  In 2010,  the
Partnership will likely complete fewer property sales than it has
in  the  past.  Until such time as economic conditions allow  the
Partnership  to  begin selling properties at  attractive  prices,
quarterly distributions will reflect the distribution of net core
rental income and capital reserves, if any. Distribution rates in
2010  are  expected to be consistent with distribution  rates  in
2009.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

       Not required for a smaller reporting company.

ITEM 4.   CONTROLS AND PROCEDURES.

       (a)  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  our  disclosure
controls  and procedures (as defined in Rule 13a-15(e) under  the
Securities  Exchange  Act of 1934 (the "Exchange  Act")).   Based
upon  that evaluation, the President and Chief Financial  Officer
of  the Managing General Partner concluded that, as of the end of
the  period  covered by this report, our disclosure controls  and
procedures  were effective in ensuring that information  required
to be disclosed by us in the reports that we file or submit under
the  Exchange Act is recorded, processed, summarized and reported
within  the time periods specified in applicable rules and  forms
and  that  such  information is accumulated and  communicated  to
management,  including the President and Chief Financial  Officer
of  the  Managing General Partner, in a manner that allows timely
decisions regarding required disclosure.

       (b)  Changes in Internal Control Over Financial Reporting.

        During  the  most recent period covered by  this  report,
there  has  been no change in our internal control over financial
reporting  (as defined in Rule 13a-15(f) under the Exchange  Act)
that  has  materially  affected,  or  is  reasonably  likely   to
materially affect, our internal control over financial reporting.
                   PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS.

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

ITEM 1A.  RISK FACTORS.

       Not required for a smaller reporting company.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

       (a) None.

       (b) Not applicable.

        (c) Pursuant to Section 7.7 of the Partnership Agreement,
each  Limited  Partner  has the right to  present  Units  to  the
Partnership  for  purchase by submitting notice to  the  Managing
General  Partner  during September of each  year.   The  purchase
price  of  the  Units  is  based on a formula  specified  in  the
Partnership  Agreement.  Units tendered to  the  Partnership  are
redeemed  on  October 1st of each year subject to  the  following
limitations.  The Partnership will not be obligated  to  purchase
in  any  year any number of Units that, when aggregated with  all
other  transfers of Units that have occurred since the  beginning
of  the  same  calendar  year (excluding Permitted  Transfers  as
defined  in the Partnership Agreement), would exceed  5%  of  the
total number of Units outstanding on January 1 of such year.   In
no event shall the Partnership be obligated to purchase Units if,
in  the  sole  discretion of the Managing General  Partner,  such
purchase   would   impair  the  capital  or  operation   of   the
Partnership.   During  the period covered  by  this  report,  the
Partnership did not purchase any Units.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES.

       None.

ITEM 5.   OTHER INFORMATION.

       None.

ITEM 6.   EXHIBITS.

    31.1  Certification  of Chief Executive  Officer  of  General
    Partner pursuant to Rule 15d-14(a)(17 CFR 240.15d-14(a))  and
    Section 302 of the Sarbanes-Oxley Act of 2002.

    31.2  Certification  of Chief Financial  Officer  of  General
    Partner pursuant to Rule 15d-14(a)(17 CFR 240.15d-14(a))  and
    Section 302 of the Sarbanes-Oxley Act of 2002.

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


                           SIGNATURES

        Pursuant  to the requirements of the Securities  Exchange
Act  of  1934, the registrant has duly caused this report  to  be
signed   on   its  behalf  by  the  undersigned  thereunto   duly
authorized.


Dated:  November 10, 2010     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/ PATRICK W KEENE
                                      Patrick W. Keene
                                      Chief Financial Officer
                                      (Principal Accounting Officer)