SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C.  20549

                           FORM 10-QSB

           Quarterly Report Under Section 13 or 15(d)
             of The Securities Exchange Act of 1934

           For the Quarter Ended:  September 30, 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 September 30, 2001 and December 31, 2000

         Statements for the Periods ended September 30, 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

            SEPTEMBER 30, 2001 AND DECEMBER 31, 2000

                           (Unaudited)

                             ASSETS

                                                   2001           2000

CURRENT ASSETS:
  Cash and Cash Equivalents                     $ 3,050,313    $ 1,388,156
  Receivables                                         6,171          5,100
  Short-Term Note Receivable                              0        675,920
                                                 -----------    -----------
      Total Current Assets                        3,056,484      2,069,176
                                                 -----------    -----------
INVESTMENTS IN REAL ESTATE:
  Land                                            5,897,504      6,134,768
  Buildings and Equipment                        10,495,531     10,832,312
  Property Acquisition Costs                              0         15,395
  Accumulated Depreciation                       (1,610,034)    (1,504,698)
                                                 -----------    -----------
      Net Investments in Real Estate             14,783,001     15,477,777
                                                 -----------    -----------
           Total  Assets                        $17,839,485    $17,546,953
                                                 ===========    ===========


                      LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
  Payable to AEI Fund Management, Inc.          $         0    $    61,934
  Distributions Payable                             405,730        390,705
  Unearned Rent                                      80,450              0
                                                 -----------    -----------
      Total Current Liabilities                     486,180        452,639
                                                 -----------    -----------
PARTNERS' CAPITAL (DEFICIT):
  General Partners                                  (11,653)       (38,243)
  Limited Partners, $1,000 Unit Value;
   24,000 Units authorized and issued;
   23,322 Units outstanding                      17,364,958     17,132,557
                                                 -----------    -----------
    Total Partners' Capital                      17,353,305     17,094,314
                                                 -----------    -----------
      Total Liabilities and Partners' Capital   $17,839,485    $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 SEPTEMBER 30

                           (Unaudited)


                              Three Months Ended         Nine Months Ended
                            9/30/01        9/30/00     9/30/01        9/30/00

INCOME:
   Rent                    $ 424,785     $ 437,732    $1,371,592   $1,292,159
   Investment Income          20,205        39,911        61,048       95,510
                            ---------     ---------    ----------   ----------
        Total Income         444,990       477,643     1,432,640    1,387,669
                            ---------     ---------    ----------   ----------

EXPENSES:
   Partnership Administration -
    Affiliates                82,427        69,897       220,151      201,130
   Partnership Administration
    and Property Management -
    Unrelated Parties         10,918        15,904        24,379       62,395
   Depreciation              121,520       116,351       366,704      353,409
   Real Estate Impairment    295,354             0       295,354            0
                            ---------     ---------    ----------   ----------
        Total Expenses       510,219       202,152       906,588      616,934
                            ---------     ---------    ----------   ----------

OPERATING INCOME (LOSS)      (65,229)      275,491       526,052      770,735

GAIN ON SALE OF REAL ESTATE  494,429       181,328       945,049      181,328
                            ---------     ---------    ----------   ----------
NET INCOME                 $ 429,200     $ 456,819    $1,471,101   $  952,063
                            =========     =========    ==========   ==========

NET INCOME ALLOCATED:
   General Partners        $  16,292     $   4,569    $   38,711   $    9,521
   Limited Partners          412,908       452,250     1,432,390      942,542
                            ---------     ---------    ----------   ----------
                           $ 429,200     $ 456,819    $1,471,101   $  952,063
                            =========     =========    ==========   ==========

NET INCOME PER
 LIMITED PARTNERSHIP UNIT
 (23,322 and 23,548
 weighted average Units
 outstanding in 2001 and
 2000, respectively)       $   17.70     $   19.21    $    61.42   $    40.03
                            =========     =========    ==========   ==========


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

        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP

                     STATEMENT OF CASH FLOWS

               FOR THE PERIODS ENDED SEPTEMBER 30

                           (Unaudited)

                                                     2001           2000
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net  Income                                   $ 1,471,101     $   952,063

   Adjustments to Reconcile Net Income to Net Cash
   Provided by Operating Activities:
     Depreciation                                    366,704         353,409
     Real Estate Impairment                          295,354               0
     Gain on Sale of Real Estate                    (945,049)       (181,328)
     Increase in Receivables                          (1,071)         (4,080)
     Increase (Decrease) in Payable to
        AEI Fund Management, Inc.                    (61,934)         44,085
     Increase in Unearned Rent                        80,450               0
                                                  -----------     -----------
        Total Adjustments                           (265,546)        212,086
                                                  -----------     -----------
        Net Cash Provided By
        Operating Activities                       1,205,555       1,164,149
                                                  -----------     -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Investments in Real Estate                     (2,174,765)     (1,335,340)
   Proceeds from Sale of Real Estate               3,152,532         332,662
   Payments Received on Short-Term Note Receivable   675,920               0
                                                  -----------     -----------
        Net Cash Provided By (Used For)
        Investing Activities                       1,653,687      (1,002,678)
                                                  -----------     -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Increase in Distributions Payable                  15,025               0
   Distributions to Partners                      (1,212,110)     (1,181,820)
                                                  -----------     -----------
        Net Cash Used For
           Financing Activities                   (1,197,085)     (1,181,820)
                                                  -----------     -----------
NET INCREASE (DECREASE) IN CASH
   AND CASH EQUIVALENTS                            1,662,157      (1,020,349)

CASH AND CASH EQUIVALENTS, beginning of period     1,388,156       2,412,278
                                                  -----------     -----------
CASH AND CASH EQUIVALENTS, end of period         $ 3,050,313     $ 1,391,929
                                                  ===========     ===========

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES:
    Note  Receivable Acquired in Sale  of  Property              $   680,000
                                                                  ===========
 The accompanying Notes to Financial Statements are an integral
                      part of this statement.
</PAGE>
<PAGE>
        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP

            STATEMENT OF CHANGES IN PARTNERS' CAPITAL

               FOR THE PERIODS ENDED SEPTEMBER 30

                           (Unaudited)



                                                                    Limited
                                                                  Partnership
                             General      Limited                    Units
                             Partners     Partners      Total     Outstanding


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

  Distributions              (11,819)    (1,170,001)   (1,181,820)

  Net Income                   9,521        942,542       952,063
                             ---------   -----------   ----------- -----------
BALANCE, September 30, 2000 $(35,754)   $17,378,953   $17,343,199   23,548.50
                             =========   ===========   =========== ===========


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

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

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


 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, 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

                       SEPTEMBER 30, 2001
                           (Continued)

(2)  Organization - (Continued)

     Any  Net  Proceeds  of Sale, as defined, from  the  sale  or
     financing of properties which the General Partners determine
     to distribute will, after provisions for debts and reserves,
     be  paid  in  the following manner: (i) first,  99%  to  the
     Limited  Partners and 1% to the General Partners  until  the
     Limited  Partners  receive an amount  equal  to:  (a)  their
     Adjusted  Capital Contribution plus (b) an amount  equal  to
     10%  of  their  Adjusted  Capital  Contribution  per  annum,
     cumulative  but not compounded, to the extent not previously
     distributed  from Net Cash Flow; (ii) any remaining  balance
     will  be distributed 90% to the Limited Partners and 10%  to
     the General Partners.  Distributions to the Limited Partners
     will be made pro rata by Units.

     For  tax  purposes,  profits  from  operations,  other  than
     profits  attributable  to  the  sale,  exchange,  financing,
     refinancing  or  other  disposition  of  property,  will  be
     allocated  first  in the same ratio in  which,  and  to  the
     extent,  Net  Cash Flow is distributed to the  Partners  for
     such year.  Any additional profits will be allocated in  the
     same  ratio  as  the  last  dollar  of  Net  Cash  Flow   is
     distributed.   Net losses from operations will be  allocated
     99% to the Limited Partners and 1% to the General Partners.

     For  tax purposes, profits arising from the sale, financing,
     or  other  disposition  of property  will  be  allocated  in
     accordance  with the Partnership Agreement as  follows:  (i)
     first,  to  those  partners with deficit balances  in  their
     capital  accounts  in an amount equal to  the  sum  of  such
     deficit  balances; (ii) second, 99% to the Limited  Partners
     and  1%  to the General Partners until the aggregate balance
     in  the Limited Partners' capital accounts equals the sum of
     the Limited Partners' Adjusted Capital Contributions plus an
     amount  equal to 10% of their Adjusted Capital Contributions
     per  annum, cumulative but not compounded, to the extent not
     previously  allocated;  (iii)  third,  the  balance  of  any
     remaining  gain  will then be allocated 90% to  the  Limited
     Partners  and 10% to the General Partners.  Losses  will  be
     allocated 98% to the Limited Partners and 2% to the  General
     Partners.

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

(3)  Short-Term Note Receivable -

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

        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS

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

     Through September 30, 2001, the Partnership sold 41.4388% of
     the Champps Americana restaurant in Schaumburg, Illinois, in
     ten  separate transactions, to unrelated third parties.  The
     Partnership  received total net sale proceeds of $2,419,052,
     which  resulted in a total net gain of $699,827.  The  total
     cost  and  related accumulated depreciation of the interests
     sold  was  $1,885,182 and $165,957, respectively.   For  the
     nine  months ended September 30, 2001 and 2000, the net gain
     was $605,992 and $51,515, respectively.

     Subsequent  to September 30, 2001, the Partnership  sold  an
     additional  7.239%  of the Champps Americana  restaurant  in
     Schaumburg,  Illinois,  in  two  separate  transactions,  to
     unrelated third parties.  The Partnership received net  sale
     proceeds of approximately $415,000, which resulted in a  net
     gain of approximately $117,000.

     On  September 18, 2001, the Partnership sold 3.5565% of  the
     Champps  Americana  restaurant in Livonia,  Michigan  to  an
     unrelated  third party.  The Partnership received  net  sale
     proceeds  of  $180,748, which resulted  in  a  net  gain  of
     $49,378.   The cost and related accumulated depreciation  of
     the interest sold was $147,597 and $16,227, respectively.

     Subsequent  to September 30, 2001, the Partnership  sold  an
     additional  12.3037% of the Champps Americana restaurant  in
     Livonia,  Michigan,  in  three  separate  transactions,   to
     unrelated third parties.  The Partnership received net  sale
     proceeds of approximately $650,000, which resulted in a  net
     gain of approximately $196,000.

     During  the  first  nine  months of  2000,  the  Partnership
     distributed $55,577 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 $2.34
     per  Limited  Partnership  Unit.   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

                       SEPTEMBER 30, 2001
                           (Continued)

(4)  Investments in Real Estate - (Continued)

     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 $1,618,824.
     The  property  is  leased to ARAMARK Educational  Resources,
     Inc. under a Lease Agreement with a primary term of 15 years
     and annual rental payments of $153,710.

     On  March  8, 2001, the Partnership purchased a 25% interest
     in a parcel of land in Austin, Texas for $283,000.  The land
     is leased to Kona Restaurant Group, Inc. (KRG) under a Lease
     Agreement with a primary term of 17 years and annual  rental
     payments  of  $29,715.  Simultaneously with the purchase  of
     the   land,  the  Partnership  entered  into  a  Development
     Financing  Agreement  under which the  Partnership  advanced
     funds  to  KRG  for  the construction of a  Johnny  Carino's
     restaurant on the site.  The Partnership charged interest on
     the  advances  at a rate of 10.5%.  On September  26,  2001,
     after the development was completed, the Lease Agreement was
     amended  to require annual rental payments of $60,191.   The
     Partnership's   share  of  the  total   acquisition   costs,
     including the cost of the land, was $571,335.  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.

     In  May, 2001, Huntington Restaurants Group, Inc. (HRG), the
     lessee  of  the  Denny's Restaurant in Covington,  Louisiana
     notified  the Partnership that it was experiencing financial
     problems  and would not make the lease payments  while  they
     worked  out  a  plan  which would enable  them  to  continue
     operations  without seeking bankruptcy protection.   Through
     September  30,  2001, HRG owed $50,812 for  past  due  rent,
     which   has  not  been  accrued.   In  October,  2001,   the
     Partnership  received an offer to sell  the  restaurant  for
     $900,000.   The Partnership is in the process of terminating
     the  Lease to accommodate the sale and it is improbable that
     any  of  the  unpaid rent will be collected.  In  the  third
     quarter  of  2001, a charge to operations  for  real  estate
     impairment  of  $295,354  was  recognized,  which   is   the
     difference between the book value at September 30,  2001  of
     $1,145,354 and the estimated net sales proceeds of $850,000.
     The charge was recorded against the cost of the building and
     equipment.

        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS

                       SEPTEMBER 30, 2001
                           (Continued)

(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 nine months ended September 30, 2001 and 2000, the
Partnership   recognized   rental  income   of   $1,371,592   and
$1,292,159,   respectively.   During  the   same   periods,   the
Partnership  earned  investment income of  $61,048  and  $95,510,
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  as  a  result  of  the loss  of  rent  from  the  Denny's
restaurant and the property sales discussed below.

        In  May, 2001, Huntington Restaurants Group, Inc.  (HRG),
the  lessee  of  the  Denny's Restaurant in Covington,  Louisiana
notified  the  Partnership  that it  was  experiencing  financial
problems and would not make the lease payments while they  worked
out a plan which would enable them to continue operations without
seeking  bankruptcy protection.  Through September 30, 2001,  HRG
owed  $50,812 for past due rent, which has not been accrued.   In
October,  2001,  the Partnership received an offer  to  sell  the
restaurant  for $900,000.  The Partnership is in the  process  of
terminating  the  Lease  to  accommodate  the  sale  and  it   is
improbable that any of the unpaid rent will be collected.  In the
third  quarter  of 2001, a charge to operations for  real  estate
impairment  of  $295,354 was recognized, which is the  difference
between  the  book value at September 30, 2001 of $1,145,354  and
the  estimated  net sales proceeds of $850,000.  The  charge  was
recorded against the cost of the building and equipment.

        During the nine months ended September 30, 2001 and 2000,
the  Partnership  paid  Partnership  administration  expenses  to
affiliated parties of $220,151 and $201,130, 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  $24,379 and $62,395, 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.

        As  of  September 30, 2001, the Partnership's  annualized
cash  distribution rate was 6.75%, based on the Adjusted  Capital
Contribution.   Distributions of Net Cash  Flow  to  the  General
Partners were subordinated to the Limited Partners as required in
the Partnership Agreement.  As a result, 99% of distributions and
income  were allocated to Limited Partners and 1% to the  General
Partners.

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

        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  nine months ended September  30,  2001,  the
Partnership's  cash  balances increased $1,662,157  mainly  as  a
result  of  cash generated from the sale of property,  which  was
partially  offset  by cash used to purchase property.   Net  cash
provided  by  operating activities increased from  $1,164,149  in
2000  to $1,205,555 in 2001 as a result of an increase in  income
and  a  decrease in Partnership administration expenses in  2001,
which  were  partially offset by net timing  differences  in  the
collection  of  payments  from the lessees  and  the  payment  of
expenses.

        The  major components of the Partnership's cash flow from
investing activities are investments in real estate and  proceeds
from  the  sale  of  real estate.  During the nine  months  ended
September 30, 2001 and 2000, the Partnership generated cash  flow
from  the  sale  of  real  estate  of  $3,152,532  and  $332,662,
respectively.  During the same periods, the Partnership  expended
$2,174,765  and  $1,335,340,  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  September  30, 2001, the  Partnership  sold  its
interest  in the Champps Americana restaurant in Columbus,  Ohio,
in eleven separate transactions, to unrelated third parties.  The
Partnership received total net sale proceeds of $2,295,174, which
resulted  in  a total net gain of $631,607.  The total  cost  and
related  accumulated  depreciation  of  the  interests  sold  was
$1,808,880 and $145,313, respectively.  For the nine months ended
September 30, 2001, the net gain was $289,679.

        Through September 30, 2001, the Partnership sold 41.4388%
of  the Champps Americana restaurant in Schaumburg, Illinois,  in
ten  separate  transactions,  to unrelated  third  parties.   The
Partnership received total net sale proceeds of $2,419,052, which
resulted  in  a total net gain of $699,827.  The total  cost  and
related  accumulated  depreciation  of  the  interests  sold  was
$1,885,182 and $165,957, respectively.  For the nine months ended
September  30,  2001  and 2000, the net  gain  was  $605,992  and
$51,515, respectively.

        Subsequent to September 30, 2001, the Partnership sold an
additional   7.239%  of  the  Champps  Americana  restaurant   in
Schaumburg, Illinois, in two separate transactions, to  unrelated
third  parties.   The Partnership received net sale  proceeds  of
approximately  $415,000,  which  resulted  in  a  net   gain   of
approximately $117,000.

       On September 18, 2001, the Partnership sold 3.5565% of the
Champps Americana restaurant in Livonia, Michigan to an unrelated
third  party.   The  Partnership received net  sale  proceeds  of
$180,748, which resulted in a net gain of $49,378.  The cost  and
related  accumulated  depreciation  of  the  interest  sold   was
$147,597 and $16,227, respectively.

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

        Subsequent to September 30, 2001, the Partnership sold an
additional  12.3037%  of  the  Champps  Americana  restaurant  in
Livonia,  Michigan, in three separate transactions, to  unrelated
third  parties.   The Partnership received net sale  proceeds  of
approximately  $650,000,  which  resulted  in  a  net   gain   of
approximately $196,000.

        During  the  first nine months of 2000,  the  Partnership
distributed  $55,577 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  $2.34  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 $1,618,824.   The
property is leased to ARAMARK Educational Resources, Inc. under a
Lease Agreement with a primary term of 15 years and annual rental
payments of $153,710.

       On March 8, 2001, the Partnership purchased a 25% interest
in  a parcel of land in Austin, Texas for $283,000.  The land  is
leased  to  Kona  Restaurant Group,  Inc.  (KRG)  under  a  Lease
Agreement  with  a  primary term of 17 years  and  annual  rental
payments  of  $29,715.  Simultaneously with the purchase  of  the
land,  the  Partnership  entered  into  a  Development  Financing
Agreement under which the Partnership advanced funds to  KRG  for
the  construction of a Johnny Carino's restaurant  on  the  site.
The  Partnership charged interest on the advances at  a  rate  of
10.5%.   On  September  26,  2001,  after  the  development   was
completed,  the  Lease Agreement was amended  to  require  annual
rental payments of $60,191.  The Partnership's share of the total
acquisition costs, including the cost of the land, was  $571,335.
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.   Effective  April 1, 2001, the Partnership's  distribution
rate   was   increased  from  6.5%  to  6.75%.   As   a   result,
distributions were higher in 2001, when compared to 2000.

        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.

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

        On  October  1, 2001, eight Limited Partners  redeemed  a
total  of 86.83 Partnership Units for $68,050 in accordance  with
the  Partnership Agreement.  The Partnership acquired these Units
using Net Cash Flow from operations.  In prior years, twenty-five
Limited Partners redeemed a total of 677.82 Partnership Units for
$579,879.    The  redemptions  increase  the  remaining   Limited
Partners' ownership interest in the Partnership.

       The continuing rent payments from the properties, together
with  cash  generated from property sales, should be adequate  to
fund   continuing   distributions  and  meet  other   Partnership
obligations on both a short-term and long-term basis.

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.

                   PART II - OTHER INFORMATION
                           (Continued)

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

      None

ITEM 5.OTHER INFORMATION

      None.

ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K

       a. Exhibits -
                             Description

       10.1   Purchase  Agreement dated July  30, 2001 between the
              Partnership and the Hoang/Do Living Trust relating to the
              property at 955 Golf Road, Schaumburg, Illinois.

       10.2   Purchase Agreement dated August 14, 2001  between the
              Partnership and Munkberg Farms Inc. relating to the property
              at 955 Golf Road, Schaumburg, Illinois.

       10.3   Purchase  Agreement, as amended,  dated  September 11,
              2001 between the Partnership and The Elizabeth C. Hsu Living
              Trust  relating  to  the  property at  19470  Haggerty Road,
              Livonia, Michigan.

       10.4   Purchase Agreement dated September 14, 2001 between  the
              Partnership  and Barbara Bou-Sliman relating to the  property
              at 955 Golf Road, Schaumburg, Illinois.

       10.5   Purchase Agreement dated September 14, 2001 between  the
              Partnership  and  Barbara Bou-Sliman Trust  relating  to  the
              property at 19470 Haggerty Road, Livonia, Michigan.

       10.6   Property  Co-Tenancy Ownership Agreement,  as  amended,
              dated  September  18,  2001 between the Partnership  and  The
              Elizabeth  C.  Hsu Living Trust relating to the  property  at
              19470 Haggerty Road, Livonia, Michigan.

       10.7   Purchase  Agreement, as amended,  dated  September  21,
              2001  between  the  Partnership and The  Sherrill  L.  Hossom
              Family  Trust  relating  to the property  at  19470  Haggerty
              Road, Livonia, Michigan.

       10.8   Purchase  Agreement, as amended,  dated  September  24,
              2001  between the Partnership and The Linda L. Landes  Family
              Trust  relating  to  the  property at  19470  Haggerty  Road,
              Livonia, Michigan.

       10.9   Purchase Agreement dated September 25, 2001 between  the
              Partnership   and  Kenneth  Robert  Mayne  Properties,   L.C.
              relating  to  the  property  at 955  Golf  Road,  Schaumburg,
              Illinois.

       10.10  First  Amendment  to  Net  Lease  Agreement  dated
              September  26, 2001 between the Partnership, AEI Real  Estate
              Fund  85-A Limited Partnership, AEI 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.

       10.11  Property  Co-Tenancy  Ownership  Agreement  dated
              October  1,  2001  between the Partnership and  Barbara  Bou-
              Sliman  relating  to  the property at  19470  Haggerty  Road,
              Livonia, Michigan.

       10.12  Property  Co-Tenancy  Ownership   Agreement,   as
              amended,  October  1,  2001 between the Partnership  and  The
              Linda  L.  Landes  Family Trust relating to the  property  at
              19470 Haggerty Road, Livonia, Michigan.

       10.13  Property  Co-Tenancy  Ownership   Agreement,   as
              amended,  October  1,  2001 between the Partnership  and  The
              Sherrill  L. Hossom Family Trust relating to the property  at
              19470 Haggerty Road, Livonia, Michigan.

       10.14  Purchase Agreement dated October 5,  2001  between
              the Partnership and The Patricia A. Struif Trust relating  to
              the property at 955 Golf Road, Schaumburg, 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:  October 26, 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)