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:  March 31, 2001

                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 March 31, 2001 and December 31, 2000

        Statements for the Periods ended March 31, 2001 and 2000:

           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

              MARCH 31, 2001 AND DECEMBER 31, 2000

                           (Unaudited)

                             ASSETS

                                                     2001          2000

CURRENT ASSETS:
  Cash and Cash Equivalents                      $ 1,109,044   $ 1,388,156
  Receivables                                         25,105         5,100
  Short-Term Note Receivable                               0       675,920
                                                  -----------   -----------
      Total Current Assets                         1,134,149     2,069,176
                                                  -----------   -----------
INVESTMENTS IN REAL ESTATE:
  Land                                             6,601,282     6,134,768
  Buildings and Equipment                         11,592,616    10,832,312
  Construction in Progress                            16,349             0
  Property Acquisition Costs                           9,339        15,395
  Accumulated Depreciation                        (1,550,665)   (1,504,698)
                                                  -----------   -----------
      Net Investments in Real Estate              16,668,921    15,477,777
                                                  -----------   -----------
           Total  Assets                         $17,803,070   $17,546,953
                                                  ===========   ===========


                       LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
  Payable to AEI Fund Management, Inc.           $    76,056   $    61,934
  Distributions Payable                              390,705       390,705
  Unearned Rent                                      102,205             0
                                                  -----------   -----------
      Total Current Liabilities                      568,966       452,639
                                                  -----------   -----------
PARTNERS' CAPITAL (DEFICIT):
  General Partners                                   (36,845)      (38,243)
  Limited Partners, $1,000 Unit Value;
   24,000 Units authorized and issued;
   23,322 Units outstanding                       17,270,949    17,132,557
                                                  -----------   -----------
      Total Partners' Capital                     17,234,104    17,094,314
                                                  -----------   -----------
        Total Liabilities and Partners' Capital  $17,803,070   $17,546,953
                                                  ===========   ===========

 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 MARCH 31

                           (Unaudited)

                                                     2001          2000

INCOME:
   Rent                                          $   456,795   $   422,404
   Investment Income                                  27,784        29,034
                                                  -----------   -----------
        Total Income                                 484,579       451,438
                                                  -----------   -----------

EXPENSES:
   Partnership Administration - Affiliates            65,974        73,505
   Partnership Administration and Property
      Management - Unrelated Parties                   7,009        24,622
   Depreciation                                      119,257       118,529
                                                  -----------   -----------
        Total Expenses                               192,240       216,656
                                                  -----------   -----------

OPERATING INCOME                                     292,339       234,782

GAIN ON SALE OF REAL ESTATE                          241,388             0
                                                  -----------   -----------
NET INCOME                                       $   533,727   $   234,782
                                                  ===========   ===========

NET INCOME ALLOCATED:
   General Partners                              $     5,337   $     2,348
   Limited Partners                                  528,390       232,434
                                                  -----------   -----------
                                                 $   533,727   $   234,782
                                                  ===========   ===========

NET INCOME PER LIMITED PARTNERSHIP UNIT
 (23,322 and 23,548 weighted average Units
 outstanding in 2001 and 2000, respectively)     $     22.66   $      9.87
                                                  ===========   ===========


 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 MARCH 31

                           (Unaudited)

                                                     2001          2000

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net  Income                                   $   533,727   $   234,782

   Adjustments to Reconcile Net Income to Net Cash
   Provided by Operating Activities:
     Depreciation                                    119,257       118,529
     Gain on Sale of Real Estate                    (241,388)            0
     Increase in Receivables                         (20,005)       (3,099)
     Increase in Payable to
        AEI Fund Management, Inc.                     14,122        31,574
     Increase in Unearned Rent                       102,205        95,333
                                                  -----------   -----------
        Total Adjustments                            (25,809)      242,337
                                                  -----------   -----------
        Net Cash Provided By
        Operating Activities                         507,918       477,119
                                                  -----------   -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Investments in Real Estate                    (1,896,770)     (539,353)
    Proceeds from Sale of Real Estate                827,757             0
    Payments Received on
      Short-Term Note  Receivable                    675,920             0
                                                  -----------   -----------
        Net Cash Used For
        Investing Activities                        (393,093)     (539,353)
                                                  -----------   -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Distributions to Partners                        (393,937)     (393,940)
                                                  -----------   -----------

NET DECREASE IN CASH AND CASH EQUIVALENTS           (279,112)     (456,174)

CASH AND CASH EQUIVALENTS, beginning of period     1,388,156     2,412,278
                                                  -----------   -----------
CASH AND CASH EQUIVALENTS, end of period         $ 1,109,044   $ 1,956,104
                                                  ===========   ===========


 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 MARCH 31

                           (Unaudited)


                                                                    Limited
                                                                  Partnership
                             General      Limited                    Units
                             Partners     Partners      Total     Outstanding


BALANCE, December 31, 1999  $(33,456)   $17,606,412   $17,572,956   23,548.50

  Distributions               (3,940)      (390,000)     (393,940)

  Net Income                   2,348        232,434       234,782
                             --------    -----------   -----------  ----------
BALANCE, March 31, 2000     $(35,048)   $17,448,846   $17,413,798   23,548.50
                             ========    ===========   ===========  ==========


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

  Distributions               (3,939)      (389,998)     (393,937)

  Net Income                   5,337        528,390       533,727
                             --------    -----------   -----------  ----------
BALANCE, March 31, 2001     $(36,845)   $17,270,949   $17,234,104   23,322.18
                             ========    ===========   ===========  ==========



 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
</PAGE>

        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS

                         MARCH 31, 2001

                           (Unaudited)

(1)  The  condensed  statements included herein have been  prepared
     by  the Partnership, without audit, pursuant to the rules  and
     regulations  of  the Securities and Exchange  Commission,  and
     reflect   all  adjustments  which  are,  in  the  opinion   of
     management,  necessary to a fair statement of the  results  of
     operations for the interim period, on a basis consistent  with
     the  annual audited statements.  The adjustments made to these
     condensed   statements  consist  only  of   normal   recurring
     adjustments.   Certain information, accounting  policies,  and
     footnote    disclosures   normally   included   in   financial
     statements  prepared  in  accordance with  generally  accepted
     accounting principles have been condensed or omitted  pursuant
     to  such  rules  and  regulations,  although  the  Partnership
     believes  that  the  disclosures  are  adequate  to  make  the
     information  presented not misleading.  It is  suggested  that
     these  condensed financial statements be read  in  conjunction
     with  the  financial statements and the summary of significant
     accounting  policies  and  notes  thereto  included   in   the
     Partnership's latest annual report on Form 10-KSB.

(2)  Organization -

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

     The   terms   of  the  Partnership  offering  call   for   a
     subscription  price of $1,000 per Limited Partnership  Unit,
     payable   on  acceptance  of  the  offer.   The  Partnership
     commenced   operations  on  April  14,  1995  when   minimum
     subscriptions    of   1,500   Limited   Partnership    Units
     ($1,500,000)  were  accepted.   On  January  31,  1997,  the
     offering  terminated when the maximum subscription limit  of
     24,000 Limited Partnership Units ($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  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.

(3)  Short-Term Note Receivable -

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


        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)

(4)  Investments in Real Estate -

     On  August  2,  2000, the Media Play store was  sold  to  an
     unrelated  third party for $2,500,000.  The  sale  agreement
     required  $500,000  in  cash and a $2,000,000  Contract  for
     Deed,  which bore interest at 9%.  On January 16, 2001,  the
     Partnership received its share of the outstanding  principal
     and  accrued interest on the Note.  The Partnership's  share
     of  the net sale proceeds was $820,651, which resulted in  a
     net  gain  of $129,813.  At the time of sale, the  cost  and
     related accumulated depreciation was $833,860 and $143,022.

     Through March 31, 2001, the Partnership sold 12.7737% of the
     Champps  Americana  restaurant in Schaumburg,  Illinois,  in
     four separate transactions, to unrelated third parties.  The
     Partnership  received total net sale proceeds  of  $728,583,
     which  resulted in a total net gain of $191,640.  The  total
     cost  and  related accumulated depreciation of the interests
     sold  was $581,116 and $44,173, respectively.  For the three
     months ended March 31, 2001, the net gain was $97,805.

     Through March 31, 2001, the Partnership sold 54.3992% of the
     Champps  Americana restaurant in Columbus,  Ohio,  in  eight
     separate  transactions,  to unrelated  third  parties.   The
     Partnership  received total net sale proceeds of $1,841,616,
     which  resulted in a total net gain of $485,511.  The  total
     cost  and  related accumulated depreciation of the interests
     sold  was  $1,451,351  and $95,246, respectively.   For  the
     three  months  ended  March  31,  2001,  the  net  gain  was
     $143,583.

     During  the  first  three months of  2000,  the  Partnership
     distributed $40,629 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 $1.71
     per  Limited  Partnership  Unit.   The  remaining  net  sale
     proceeds will either be reinvested in additional property or
     distributed to the Partners in the future.

     On March 8, 2000, the Partnership purchased a parcel of land
     in  Fort Wayne, Indiana for $549,000.  The land is leased to
     Tumbleweed,  Inc.  (TWI)  under a  Lease  Agreement  with  a
     primary  term  of  15  years and annual rental  payments  of
     $48,038.  Simultaneously with the purchase of the land,  the
     Partnership  entered into a Development Financing  Agreement
     under  which the Partnership advanced funds to TWI  for  the
     construction  of  a  Tumbleweed  restaurant  on  the   site.
     Initially, the Partnership charged interest on the  advances
     at  a  rate of 8.75%.  Effective July 5, 2000, the  interest
     rate  was increased to 9.875%.  On September 11, 2000, after
     the  development  was  completed, the  Lease  Agreement  was
     amended  to  require  annual rental  payments  of  $132,621.
     Total  acquisition costs, including the cost  of  the  land,
     were $1,334,315.

     On  March  30, 2001, the Partnership purchased a  Children's
     World  daycare center in Mundelein, Illinois for $1,603,477.
     The  property  is  leased to ARAMARK Educational  Resources,
     Inc. under a Lease Agreement with a primary term of 15 years
     and annual rental payments of $153,710.


        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)

(4)  Investments in Real Estate - (Continued)

     On  March  8, 2001, the Partnership purchased a 25% interest
     in a parcel of land in Austin, Texas for $283,000.  The land
     is leased to Kona Restaurant Group, Inc. (KRG) under a Lease
     Agreement with a primary term of 17 years and annual  rental
     payments  of  $29,715.  Simultaneously with the purchase  of
     the   land,  the  Partnership  entered  into  a  Development
     Financing Agreement under which the Partnership will advance
     funds  to  KRG  for  the construction of a  Johnny  Carino's
     restaurant  on  the  site.   Through  March  31,  2001,  the
     Partnership had advanced $16,349 for the construction of the
     property and was charging interest on the advances at a rate
     of  10.5%.   The  Partnership's share of the total  purchase
     price, including the cost of the land, will be approximately
     $573,000.   After  the construction is complete,  the  Lease
     Agreement will be amended to require annual rental  payments
     of  approximately $60,000.  The remaining interests  in  the
     property  are  owned by AEI Real Estate  Fund  85-A  Limited
     Partnership, AEI Net Lease Income & Growth Fund  XX  Limited
     Partnership, and AEI Income & Growth Fund 23 LLC, affiliates
     of the Partnership.

     The Partnership has incurred net costs of $9,339 relating to
     the  review  of potential property acquisitions  which  have
     been  capitalized  and will be allocated  to  properties  in
     future periods.

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

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


ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS

Results of Operations

        For  the three months ended March 31, 2001 and 2000,  the
Partnership  recognized rental income of $456,795  and  $422,404,
respectively.   During the same periods, the  Partnership  earned
investment income of $27,784 and $29,034, respectively.  In 2001,
rental  income increased as a result of additional rent  received
from  three  property acquisitions in 2000  and  2001,  and  rent
increases  on four properties.  These increases in rental  income
were  partially offset by a decrease in rental income due to  the
property sales discussed below.

       During the three months ended March 31, 2001 and 2000, the
Partnership   paid   Partnership   administration   expenses   to
affiliated  parties of $65,974 and $73,505, respectively.   These
administration  expenses  include  costs  associated   with   the
management of the properties, processing distributions, reporting
requirements and correspondence to the Limited Partners.   During
the   same   periods,   the  Partnership   incurred   Partnership
administration  and property management expenses  from  unrelated
parties  of  $7,009  and $24,622, respectively.   These  expenses
represent  direct payments to third parties for legal and  filing
fees,  direct administrative costs, outside audit and  accounting
costs,  taxes, insurance and other property costs.  The  decrease
in  these expenses in 2001, when compared to 2000, is mainly  the
result  of  expenses incurred in 2000 related to the  Media  Play
store.


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

        As  of March 31, 2001, the Partnership's annualized  cash
distribution  rate  was  6.5%,  based  on  the  Adjusted  Capital
Contribution.   Distributions of Net Cash  Flow  to  the  General
Partners were subordinated to the Limited Partners as required in
the Partnership Agreement.  As a result, 99% of distributions and
income  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.

Liquidity and Capital Resources

        During  the  three  months  ended  March  31,  2001,  the
Partnership's cash balances decreased $279,112 mainly as a result
of  cash used to purchase property, which was partially offset by
cash  generated from the sale of property.  Net cash provided  by
operating activities increased from $477,119 in 2000 to  $507,918
in  2001  as a result of an increase in income and a decrease  in
Partnership administration expenses in 2001.

        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 three  months  ended
March 31, 2001, the Partnership generated cash flow from the sale
of  real estate of $827,757.  During the three months ended March
31,  2001  and  2000,  the  Partnership expended  $1,896,770  and
$539,353,  respectively, to invest in real properties  (inclusive
of  acquisition  expenses)  as  the Partnership  reinvested  cash
generated from property sales.

        On  August 2, 2000, the Media Play store was sold  to  an
unrelated   third  party  for  $2,500,000.   The  sale  agreement
required  $500,000  in cash and a $2,000,000 Contract  for  Deed,
which  bore interest at 9%.  On January 16, 2001, the Partnership
received  its  share  of  the outstanding principal  and  accrued
interest  on the Note.  The Partnership's share of the  net  sale
proceeds  was $820,651, which resulted in a net gain of $129,813.
At   the   time   of  sale,  the  cost  and  related  accumulated
depreciation was $833,860 and $143,022.

        Through March 31, 2001, the Partnership sold 12.7737%  of
the Champps Americana restaurant in Schaumburg, Illinois, in four
separate   transactions,  to  unrelated   third   parties.    The
Partnership  received total net sale proceeds of $728,583,  which
resulted  in  a total net gain of $191,640.  The total  cost  and
related  accumulated  depreciation  of  the  interests  sold  was
$581,116  and $44,173, respectively.  For the three months  ended
March 31, 2001, the net gain was $97,805.

        Through March 31, 2001, the Partnership sold 54.3992%  of
the  Champps  Americana restaurant in Columbus,  Ohio,  in  eight
separate   transactions,  to  unrelated   third   parties.    The
Partnership received total net sale proceeds of $1,841,616, which
resulted  in  a total net gain of $485,511.  The total  cost  and
related  accumulated  depreciation  of  the  interests  sold  was
$1,451,351 and $95,246, respectively.  For the three months ended
March 31, 2001, the net gain was $143,583.

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

        During  the  first three months of 2000, the  Partnership
distributed  $40,629 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  $1.71  per  Limited
Partnership Unit.  The remaining net sale proceeds will either be
reinvested in additional property or distributed to the  Partners
in the future.

        On  March 8, 2000, the Partnership purchased a parcel  of
land in Fort Wayne, Indiana for $549,000.  The land is leased  to
Tumbleweed,  Inc. (TWI) under a Lease Agreement  with  a  primary
term   of  15  years  and  annual  rental  payments  of  $48,038.
Simultaneously  with  the purchase of the land,  the  Partnership
entered  into a Development Financing Agreement under  which  the
Partnership  advanced  funds to TWI for  the  construction  of  a
Tumbleweed  restaurant on the site.  Initially,  the  Partnership
charged  interest on the advances at a rate of 8.75%.   Effective
July  5,  2000,  the interest rate was increased to  9.875%.   On
September  11,  2000, after the development  was  completed,  the
Lease Agreement was amended to require annual rental payments  of
$132,621.   Total acquisition costs, including the  cost  of  the
land, were $1,334,315.

        On March 30, 2001, the Partnership purchased a Children's
World daycare center in Mundelein, Illinois for $1,603,477.   The
property is leased to ARAMARK Educational Resources, Inc. under a
Lease Agreement with a primary term of 15 years and annual rental
payments of $153,710.

       On March 8, 2001, the Partnership purchased a 25% interest
in  a parcel of land in Austin, Texas for $283,000.  The land  is
leased  to  Kona  Restaurant Group,  Inc.  (KRG)  under  a  Lease
Agreement  with  a  primary term of 17 years  and  annual  rental
payments  of  $29,715.  Simultaneously with the purchase  of  the
land,  the  Partnership  entered  into  a  Development  Financing
Agreement under which the Partnership will advance funds  to  KRG
for the construction of a Johnny Carino's restaurant on the site.
Through March 31, 2001, the Partnership had advanced $16,349  for
the construction of the property and was charging interest on the
advances  at  a rate of 10.5%.  The Partnership's  share  of  the
total  purchase price, including the cost of the  land,  will  be
approximately $573,000.  After the construction is complete,  the
Lease Agreement will be amended to require annual rental payments
of   approximately  $60,000.   The  remaining  interests  in  the
property  are  owned  by  AEI  Real  Estate  Fund  85-A   Limited
Partnership,  AEI  Net  Lease Income &  Growth  Fund  XX  Limited
Partnership,  and AEI Income & Growth Fund 23 LLC, affiliates  of
the Partnership.

       The Partnership's primary use of cash flow is distribution
and  redemption  payments to Partners.  The Partnership  declares
its  regular  quarterly  distributions before  the  end  of  each
quarter and pays the distribution in the first week after the end
of  each quarter.  The Partnership attempts to maintain a  stable
distribution  rate from quarter to quarter.  Redemption  payments
are  paid  to  redeeming Partners in the fourth quarter  of  each
year.

        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.

        During 2000, twelve Limited Partners redeemed a total  of
226.32  Partnership  Units for $186,379 in  accordance  with  the
Partnership  Agreement.   The Partnership  acquired  these  Units
using  Net  Cash Flow from operations.  In prior years,  thirteen
Limited Partners redeemed a total of 451.47 Partnership Units for
$393,500.    The  redemptions  increase  the  remaining   Limited
Partners' ownership interest in the Partnership.

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

       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.

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:

    Market  and  economic conditions which affect the  value
    of  the  properties the Partnership owns and  the  cash
    from rental income such properties generate;

    the  federal  income tax consequences of rental  income,
    deductions,  gain  on  sales and other  items  and  the
    affects of these consequences for investors;

    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.


                   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


                   PART II - OTHER INFORMATION
                           (Continued)

ITEM 5.OTHER INFORMATION

      None.

ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K

       a. Exhibits -
                       Description

    10.1  Purchase  Agreement dated March  5,  2001  between  the
    Partnership  and James and Mary Rea relating to the  property
    at 161 E. Campus View Boulevard, Columbus, Ohio.

    10.2  Purchase  Agreement dated March  5,  2001  between  the
    Partnership  and Michael J. Rush relating to the property  at
    955 Golf Road, Schaumburg, Illinois.

    10.3  Development  Financing Agreement dated  March  8,  2001
    between  the  Partnership, AEI Real Estate Fund 85-A  Limited
    Partnership,  AEI Net Lease Income & Growth Fund  XX  Limited
    Partnership,  AEI  Income  & Growth  Fund  23  LLC  and  Kona
    Restaurant  Group,  Inc. relating to  the  property  at  5601
    Brodie Lane, Austin, Texas.

    10.4  Net  Lease Agreement  dated March 8, 2001  between  the
    Partnership,  AEI Real Estate Fund 85-A Limited  Partnership,
    AEI  Net  Lease Income & Growth Fund XX Limited  Partnership,
    AEI  Income  & Growth Fund 23 LLC and Kona Restaurant  Group,
    Inc.  relating  to the property at 5601 Brodie Lane,  Austin,
    Texas.

    10.5  Purchase Agreement dated March  26, 2001  between   the
    Partnership  and Patrick and Dolores Devlin relating  to  the
    property at 161 E. Campus View Boulevard, Columbus, Ohio.

    10.6  Net Lease Agreement  dated March 30, 2001  between  the
    Partnership and ARAMARK Educational Resources, Inc.  relating
    to the property at 800 South Route 83, Mundelein, Illinois.

       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:  May 10, 2001          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)