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, 1997
                                
                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)
                                
                          (612) 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, 1997 and December 31, 1996 

          Statements for the Periods ended September 30, 1997 and 1996:

            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, 1997 AND DECEMBER 31, 1996
                                
                           (Unaudited)
                                
                             ASSETS
                                
                                                    1997             1996

CURRENT ASSETS:
  Cash and Cash Equivalents                    $  4,726,867      $ 10,729,033
  Receivables                                       125,589            41,672
                                                ------------      ------------
      Total Current Assets                        4,852,456        10,770,705
                                                ------------      ------------
INVESTMENTS IN REAL ESTATE:
  Land                                            6,674,998         2,541,511
  Buildings and Equipment                         6,304,833         5,079,924
  Construction in Progress                        1,986,803                 0
  Construction Advances                                   0         1,621,870
  Property Acquisition Costs                        292,562           245,726
  Accumulated Depreciation                         (338,122)         (162,645)
                                                ------------      ------------
      Net Investments in Real Estate             14,921,074         9,326,386
                                                ------------      ------------
            Total Assets                       $ 19,773,530      $ 20,097,091
                                                ============      ============


                        LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
  Payable to AEI Fund Management, Inc.         $     71,084      $    132,900
  Distributions Payable                             481,275           429,668
  Unearned Rent                                      55,971                 0
                                                ------------      ------------
      Total Current Liabilities                     608,330           562,568
                                                ------------      ------------
PARTNERS' CAPITAL (DEFICIT):
  General Partners                                  (17,235)           (9,754)
  Limited Partners, $1,000 Unit Value;
   24,000 Units authorized; 24,000 and 23,563
   Units issued and outstanding in 1997 and
   1996, respectively                            19,182,435        19,544,277
                                                ------------      ------------
    Total Partners' Capital                      19,165,200        19,534,523
                                                ------------      -----------
      Total Liabilities and Partners' Capital  $ 19,773,530      $ 20,097,091
                                                ============      ===========
                                
 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
                              9/30/97        9/30/96    9/30/97        9/30/96

INCOME:
   Rent                    $  282,333     $  168,116   $  698,606   $  377,035
   Investment Income          100,539        126,602      399,667      348,538
                            ----------     ----------   ----------   ----------
        Total Income          382,872        294,718    1,098,273      725,573
                            ----------     ----------   ----------   ----------

EXPENSES:
   Partnership Administration - 
    Affiliates                 58,760         80,814      173,033      187,609
   Partnership Administration 
    and Property Management - 
    Unrelated Parties          30,073          2,664       82,729       19,651
   Depreciation                65,756         43,360      181,593       97,070
                            ----------     ----------   ----------   ----------
        Total Expenses        154,589        126,838      437,355      304,330
                            ----------     ----------   ----------   ----------

OPERATING INCOME              228,283        167,880      660,918      421,243

GAIN ON SALE OF REAL ESTATE    42,582              0       42,582            0
                            ----------     ----------   ----------   ----------

NET INCOME                 $  270,865     $  167,880   $  703,500   $  421,243
                            ==========     ==========   ==========   ==========

NET INCOME ALLOCATED:
   General Partners        $    2,709     $    1,678   $    7,035   $    4,212
   Limited Partners           268,156        166,202      696,465      417,031
                            ----------     ----------   ----------   ----------
                           $  270,865     $  167,880   $  703,500   $  421,243
                            ==========     ==========   ==========   ==========

NET INCOME PER
  LIMITED PARTNERSHIP UNIT
  (24,000, 18,870, 23,952 and 
  16,084 weighted average Units
  outstanding for the periods,
  respectively)            $    11.17     $    8.81    $   29.08    $    25.93
                            ==========     ==========   ==========   ==========

 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)
                                
                                                      1997            1996

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net Income                                     $   703,500    $   421,243

   Adjustments to Reconcile Net Income to Net Cash
   Provided by Operating Activities:
     Depreciation                                     181,593        97,070
     Gain on Sale of Real Estate                      (42,582)            0
     Increase in Receivables                          (83,917)      (24,758)
     Increase (Decrease) in Payable to
        AEI Fund Management, Inc.                     (61,816)       67,452
     Increase in Unearned Rent                         55,971        31,998
                                                   -----------   -----------
        Total Adjustments                              49,249       171,762
                                                   -----------   -----------
        Net Cash Provided By
        Operating Activities                          752,749       593,005
                                                   -----------   -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Investments in Real Estate                      (5,959,321)   (6,694,293)
   Proceeds from Sale of Real Estate                  225,622             0
                                                   -----------   -----------
        Net Cash Used For
        Investing Activities                       (5,733,699)   (6,694,293)
                                                   -----------   -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Capital Contributions from Limited Partners        436,651     8,202,697
   Organization and Syndication Costs                 (57,869)   (1,115,818)
   Increase in Distributions Payable                   51,607       178,171
   Distributions to Partners                       (1,451,605)     (971,458)
                                                   -----------   -----------
        Net Cash Provided By (Used For)
        Financing Activities                       (1,021,216)    6,293,592
                                                   -----------   -----------
NET INCREASE (DECREASE) IN CASH
   AND CASH EQUIVALENTS                            (6,002,166)      192,304

CASH AND CASH EQUIVALENTS, beginning of period     10,729,033     8,367,460
                                                   -----------   -----------

CASH AND CASH EQUIVALENTS, end of period          $ 4,726,867   $ 8,559,764
                                                   ===========   ===========

 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, 1995     $ (4,832)   $10,291,351  $10,286,519   12,289.81

  Capital Contributions               0      8,202,697    8,202,697    8,202.69

  Organization and 
   Syndication Costs                  0     (1,115,818)  (1,115,818)

  Distributions                  (9,714)      (961,744)    (971,458)

  Net Income                      4,212        417,031      421,243
                               ---------    -----------  -----------  ---------
BALANCE, September 30, 1996   $ (10,334)   $16,833,517  $16,823,183   20,492.50
                               =========    ===========  ===========  =========


BALANCE, December 31, 1996    $  (9,754)   $19,544,277  $19,534,523   23,563.35

  Capital Contributions               0        436,651      436,651      436.65

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

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

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




 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, 1997
                                
                           (Unaudited)
                                

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

     AEI   Income   &   Growth   Fund  XXI  Limited   Partnership
     (Partnership)  was  formed to acquire and  lease  commercial
     properties   to   operating  tenants.    The   Partnership's
     operations  are  managed by AEI Fund  Management  XXI,  Inc.
     (AFM),  the  Managing  General Partner of  the  Partnership.
     Robert  P.  Johnson, the President and sole  shareholder  of
     AFM,  serves  as  the  Individual  General  Partner  of  the
     Partnership.   An  affiliate of AFM,  AEI  Fund  Management,
     Inc.,  performs  the administrative and operating  functions
     for the Partnership.
     
     The   terms   of  the  Partnership  offering  call   for   a
     subscription  price of $1,000 per Limited Partnership  Unit,
     payable   on  acceptance  of  the  offer.   The  Partnership
     commenced   operations  on  April  14,  1995  when   minimum
     subscriptions    of   1,500   Limited   Partnership    Units
     ($1,500,000)  were  accepted.   On  January  31,  1997,  the
     Partnership    offering   terminated   when   the    maximum
     subscription  limit  of  24,000  Limited  Partnership  Units
     ($24,000,000) was reached.
     
     Under  the  terms of the Limited Partnership Agreement,  the
     Limited  Partners and General Partners contributed funds  of
     $24,000,000 and $1,000, respectively.  During the  operation
     of the Partnership, any Net Cash Flow, as defined, which the
     General Partners determine to distribute will be distributed
     90% to the Limited Partners and 10% to the General Partners;
     provided,  however, that such distributions to  the  General
     Partners will be subordinated to the Limited Partners  first
     receiving an annual, noncumulative distribution of Net  Cash
     Flow equal to 10% of their Adjusted Capital Contribution, as
     defined,  and, provided further, that in no event  will  the
     General Partners receive less than 1% of such Net Cash  Flow
     per  annum.  Distributions to Limited Partners will be  made
     pro rata by Units.
     
                                
        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)
                                
(2)  Organization - (Continued)

     Any  Net  Proceeds  of Sale, as defined, from  the  sale  or
     financing of the Partnership's properties which the  General
     Partners determine to distribute will, after provisions  for
     debts  and  reserves, be paid in the following  manner:  (i)
     first,  99%  to the Limited Partners and 1% to  the  General
     Partners until the Limited Partners receive an amount  equal
     to:  (a)  their Adjusted Capital Contribution  plus  (b)  an
     amount  equal  to 10% of their Adjusted Capital Contribution
     per  annum, cumulative but not compounded, to the extent not
     previously  distributed  from  Net  Cash  Flow;   (ii)   any
     remaining  balance will be distributed 90%  to  the  Limited
     Partners and 10% to the General Partners.  Distributions  to
     the Limited Partners will be made pro rata by Units.
     
     For  tax  purposes,  profits  from  operations,  other  than
     profits  attributable  to  the  sale,  exchange,  financing,
     refinancing   or  other  disposition  of  the  Partnership's
     property,  will  be  allocated first in the  same  ratio  in
     which,  and  to the extent, Net Cash Flow is distributed  to
     the Partners for such year.  Any additional profits will  be
     allocated in the same ratio as the last dollar of  Net  Cash
     Flow  is  distributed.  Net losses from operations  will  be
     allocated 99% to the Limited Partners and 1% to the  General
     Partners.
     
     For  tax purposes, profits arising from the sale, financing,
     or  other disposition of the Partnership's property will  be
     allocated  in  accordance with the Partnership Agreement  as
     follows:  (i) first, to those partners with deficit balances
     in  their capital accounts in an amount equal to the sum  of
     such  deficit  balances; (ii) second,  99%  to  the  Limited
     Partners  and 1% to the General Partners until the aggregate
     balance in the Limited Partners' capital accounts equals the
     sum  of the Limited Partners' Adjusted Capital Contributions
     plus  an  amount  equal  to 10% of  their  Adjusted  Capital
     Contributions  per annum, cumulative but not compounded,  to
     the  extent  not  previously  allocated;  (iii)  third,  the
     balance of any remaining gain will then be allocated 90%  to
     the  Limited  Partners  and  10% to  the  General  Partners.
     Losses will be allocated 98% to the Limited Partners and  2%
     to the General Partners.
     
     The  General Partners are not required to currently  fund  a
     deficit   capital   balance.   Upon   liquidation   of   the
     Partnership or withdrawal by a General Partner, the  General
     Partners will contribute to the Partnership an amount  equal
     to  the  lesser  of  the deficit balances in  their  capital
     accounts  or  1%  of  total Limited  Partners'  and  General
     PartnersO capital contributions.
                                
        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)
                                
(3)  Investments in Real Estate -

     The  Partnership  leases its properties to  various  tenants
     through   non-cancelable  triple  net  leases,   which   are
     classified  as operating leases.  Under a triple net  lease,
     the  lessee  is  responsible  for  all  real  estate  taxes,
     insurance,  maintenance, repairs and operating  expenses  of
     the  property.  The initial Lease terms are 20 years, except
     Caribou  Coffee,  which  is 18 years.   The  Leases  contain
     renewal   options  which  may  extend  the  Lease  term   an
     additional  10  years  for  the Arby's  and  Caribou  Coffee
     restaurants,  an  additional  15  years  for   the   Champps
     Americana  and  Denny's restaurants, and  an  additional  25
     years  for the Garden Ridge store.  The Leases contain  rent
     clauses  which entitle the Partnership to receive additional
     rent  in  future  years  based  on  stated  rent  increases.
     Certain  lessees have been granted options to  purchase  the
     property.   Depending on the lease, the  purchase  price  is
     either  determined by a formula, or is the  greater  of  the
     fair  market value of the property or the amount  determined
     by  a  formula.   In  all cases, if the option  were  to  be
     exercised by the lessee, the purchase price would be greater
     than the original cost of the property.
     
     The  Partnership's  properties are all  commercial,  single-
     tenant  buildings.   The cost of the  property  and  related
     accumulated  depreciation  at  September  30,  1997  are  as
     follows:

                                     Buildings and                Accumulated
Property                   Land        Equipment       Total      Depreciation

Arby's
 Montgomery, AL       $   328,310   $   425,794    $   754,104    $   39,741
Media Play
 Apple Valley, MN         422,776       991,284      1,414,060        75,313
Garden Ridge
 Pineville, NC          1,181,253     2,463,138      3,644,391       147,788
Champps Americana
 Columbus, OH             545,470     1,074,254      1,619,724        52,374
Denny's
 Covington, LA            522,264       756,775      1,279,039        18,656
Caribou Coffee
 Charlotte, NC            691,855       593,588      1,285,443         4,250
Champps Americana
 San Antonio, TX        1,032,299             0      1,032,299             0
Champps Americana
 Schaumburg, IL           876,387             0        876,387             0
Champps Americana
 Livonia, MI            1,074,384             0      1,074,384             0
                       -----------   -----------    -----------   -----------
                      $ 6,674,998   $ 6,304,833    $12,979,831   $   338,122
                       ===========   ===========    ===========   ===========
                                
        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)
                                
(3)  Investments in Real Estate - (Continued)

     On  December  21,  1995, the Partnership purchased  a  34.0%
     interest  in  a  Media Play retail store  in  Apple  Valley,
     Minnesota  for $1,414,060.  The property was leased  to  The
     Musicland Group, Inc. (MGI) under a Lease Agreement  with  a
     primary  term  of  18  years and annual rental  payments  of
     $139,587.   The  remaining  interest  in  the  property  was
     purchased by AEI Net Lease Income & Growth Fund XIX  Limited
     Partnership  and  AEI  Net Lease Income  &  Growth  Fund  XX
     Limited Partnership, affiliates of the Partnership.
     
     In  December,  1996,  the Partnership  and  MGI  reached  an
     agreement in which MGI would buy out and terminate the Lease
     Agreement by making a payment of $800,000, which is equal to
     approximately two years' rent.  The Partnership's  share  of
     such  payment  was  $272,000.   Under  the  Agreement,   MGI
     remained in possession of the property and performed all  of
     its  obligations  under  the  net  lease  agreement  through
     January  31, 1997 at which time it vacated the property  and
     made  it  available for re-let to another tenant.   MGI  was
     responsible for all maintenance and management costs of  the
     property  through  January31,  1997  after  which  date  the
     Partnership  became responsible for its  share  of  expenses
     associated with the property until it is re-let or sold.   A
     specialist in commercial property leasing has been  retained
     to locate a new tenant for the property.
     
     On  March  28,  1996,  the Partnership  purchased  a  40.75%
     interest  in  a  Garden  Ridge  store  in  Pineville,  North
     Carolina  for $3,644,391.  The property is leased to  Garden
     Ridge,  L.P. under a Lease Agreement with a primary term  of
     20  years  and  annual  rental payments  of  $383,973.   The
     remaining interest in the property was purchased by AEI  Net
     Lease  Income & Growth Fund XIX Limited Partnership and  AEI
     Net  Lease  Income  &  Growth Fund XX  Limited  Partnership,
     affiliates of the Partnership.
     
     On  August  29,  1996,  the Partnership  purchased  a  67.8%
     interest in a Champps Americana restaurant in Columbus, Ohio
     for  $1,808,880.  The property is leased to Americana Dining
     Corporation under a Lease Agreement with a primary  term  of
     20  years  and  annual  rental payments  of  $191,259.   The
     remaining interest in the property was purchased by AEI Real
     Estate  Fund XVIII Limited Partnership, an affiliate of  the
     Partnership.
     
     On  March  14, 1997, the Partnership purchased a  parcel  of
     land  in  San  Antonio, Texas for $1,032,299.  The  land  is
     leased  to Champps Americana, Inc. (Champps) under  a  Lease
     Agreement with a primary term of 20 years and annual  rental
     payments  of  $83,451.   Effective September  9,  1997,  the
     annual rent was increased to $128,156.  The Partnership also
     entered  into a Development Financing Agreement under  which
     the  Partnership  will  advance funds  to  Champps  for  the
     construction of a Champps Americana restaurant on the  site.
     Through  September  30, 1997, the Partnership  had  advanced
     $1,172,890  for  the construction of the  property  and  was
     charging  interest  on  the advances  at  a  rate  of  7.0%.
     Effective September 9, 1997, the Partnership began  charging
     interest  on  the  Note at the rate of  10.75%.   The  total
     purchase  price,  including the cost of the  land,  will  be
     approximately   $2,804,000.   After  the   construction   is
     complete,  the  Lease Agreement will be amended  to  require
     annual rental payments of approximately $300,000.
     
                                
        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)
                                
(3)  Investments in Real Estate - (Continued)

     On  March  19,  1997,  the Partnership purchased  a  Denny's
     restaurant  in  Covington, Louisiana  for  $1,279,039.   The
     property  is  leased to Huntington Restaurants  Group,  Inc.
     under a Lease Agreement with a primary term of 20 years  and
     annual rental payments of $141,243.
     
     On  April  21,  1997,  the  Partnership  purchased  a  49.6%
     interest  in  a parcel of land in Schaumburg,  Illinois  for
     $876,387.   The  land  is leased to Champps  under  a  Lease
     Agreement with a primary term of 20 years and annual  rental
     payments  of $66,906.  The Partnership also entered  into  a
     Development  Financing Agreement under which the Partnership
     will  advance  funds to Champps for the  construction  of  a
     Champps Americana restaurant on the site.  Through September
     30,  1997,  the  Partnership had advanced $212,034  for  the
     construction  of the property and was charging  interest  on
     the advances at a rate of 7.0%.  The Partnership's share  of
     the  total  purchase price, including the cost of the  land,
     will be approximately $2,128,000.  After the construction is
     complete,  the  Lease Agreement will be amended  to  require
     annual  rental  payments  of  approximately  $229,000.   The
     remaining interests in the property are owned by AEI  Income
     &  Growth Fund XX Limited Partnership and Net Lease Income &
     Growth  Fund  84-A  Limited Partnership, affiliates  of  the
     Partnership.
     
     On  July 8, 1997, the Partnership purchased a parcel of land
     in  Livonia, Michigan for $1,074,384.  The land is leased to
     Champps  under a Lease Agreement with a primary term  of  20
     years   and   annual  rental  payments  of   $75,207.    The
     Partnership  also  entered  into  a  Development   Financing
     Agreement under which the Partnership will advance funds  to
     Champps   for  the  construction  of  a  Champps   Americana
     restaurant  on  the site.  Through September 30,  1997,  the
     Partnership  had  advanced $362,611 for the construction  of
     the property and was charging interest on the advances at  a
     rate  of 7.0%.  The total purchase price, including the cost
     of  the  land, will be approximately $3,970,000.  After  the
     construction  is  complete,  the  Lease  Agreement  will  be
     amended  to  require annual rental payments of approximately
     $427,000.
     
     On July 31, 1997, the Partnership purchased a 93.1% interest
     in  a Caribou Coffee store in Charlotte, North Carolina  for
     $1,285,443.   The  property  is  leased  to  Caribou  Coffee
     Company, Inc. under a Lease Agreement with a primary term of
     18  years  and  annual  rental payments  of  $146,438.   The
     remaining  interest  in  the  property  is  owned   by   AEI
     Institutional  Net  Lease  Fund '93,  an  affiliate  of  the
     Partnership.
     
     The  Partnership has incurred net costs of $464,785 relating
     to  the review of potential property acquisitions.  Of these
     costs, $172,223 have been capitalized and allocated to land,
     building  and  equipment.  The remaining costs  of  $292,562
     have  been  capitalized  and will be allocated  to  property
     acquisitions in future periods.
     
     On  September  30,  1997,  the Partnership  sold  a  7.0899%
     interest  in  the Champps Americana restaurant in  Columbus,
     Ohio  to an unrelated third party.  The Partnership received
     net  sale proceeds of $225,622 which resulted in a net  gain
     of   $42,582.    The  total  cost  and  related  accumulated
     depreciation of the interest sold was $189,156  and  $6,116,
     respectively.
     
                                
        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)
                                
(3)  Investments in Real Estate - (Continued)

     During  the  first  nine  months of  1997,  the  Partnership
     distributed net sale proceeds of $190,810 to the Limited and
     General   Partners  as  part  of  their  regular   quarterly
     distributions which represented a return of capital of $7.87
     per  Limited  Partnership  Unit.   The  remaining  net  sale
     proceeds  will either be reinvested in additional properties
     or distributed to the Partners in the future.
     
(4)  Payable to AEI Fund Management, Inc. -

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


ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS

Results of Operations

       For the nine months ended September 30, 1997 and 1996, the
Partnership  recognized rental income of $698,606  and  $377,035,
respectively.   During the same periods, the  Partnership  earned
$399,667  and $348,538, respectively, in investment  income  from
subscriptions  proceeds which were invested in  short-term  money
market accounts, commercial paper and federal agency notes.  This
investment income constituted 36% and 48%, respectively, of total
income   for  the  periods.   The  percentage  of  total   income
represented   by  investment  income  declines  as   subscription
proceeds are invested in properties.

        Musicland Group, Inc. (MGI), the lessee of the Media Play
retail  store in Apple Valley, Minnesota has recently experienced
financial  difficulties and has aggressively  been  restructuring
its  organization.  As part of the restructuring, the Partnership
and MGI reached an agreement in December, 1996 in which MGI would
buy out and terminate the Lease Agreement by making a payment  of
$800,000,  which is equal to approximately two years' rent.   The
Partnership's  share  of such payment was  $272,000.   Under  the
Agreement,  MGI  remained  in  possession  of  the  property  and
performed  all  of its obligations under the net lease  agreement
through  January 31, 1997 at which time it vacated  the  property
and  made  it  available for re-let to another tenant.   MGI  was
responsible  for  all  maintenance and management  costs  of  the
property   through  January  31,  1997  after  which   date   the
Partnership   became  responsible  for  its  share  of   expenses
associated  with  the property until it is  re-let  or  sold.   A
specialist  in commercial property leasing has been  retained  to
locate  a  new tenant for the property.  In 1997, the Partnership
received $93,058 less in rent than in 1996 from Media Play.


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

        During the nine months ended September 30, 1997 and 1996,
the  Partnership  paid  Partnership  administration  expenses  to
affiliated parties of $173,033 and $187,609, respectively.  These
administration  expenses  include  initial  start-up  costs   and
expenses  associated  with  processing  distributions,  reporting
requirements  and  correspondence to the Limited  Partners.   The
administrative expenses decrease after completion of the offering
and  acquisition phases of the Partnership's operations.   During
the   same   periods,   the  Partnership   incurred   Partnership
administration  and property management expenses  from  unrelated
parties  of  $82,729 and $19,651, 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 increase
in  these expenses in 1997, when compared to 1996, is the  result
of  expenses incurred in 1997 related to the Media Play situation
discussed above.

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

         As   of  September  30,  1997,  the  Partnership's  cash
distribution rate was 8.0% on an annualized basis.  Distributions
of  Net Cash Flow to the General Partners are subordinated to the
Limited Partners as required in the Partnership Agreement.  As  a
result,  99% of distributions were allocated to Limited  Partners
and 1% to the General Partners.

       Since the Partnership has only recently purchased its real
estate,  inflation  has  had  a minimal  effect  on  income  from
operations.  The Leases contain cost of living increases to  rent
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

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

        The Partnership Agreement requires that no more than  15%
of  the  proceeds from the sale of Units be applied  to  expenses
involved  in the sale of Units (including Commissions)  and  that
such expenses, together with acquisition expenses, not exceed 20%
of  the proceeds from the sale of Units.  As set forth under  the
caption  "Estimated  Use  of Proceeds"  of  the  Prospectus,  the
General  Partners  anticipate that 14% of such proceeds  will  be
applied  to  cover  organization and  offering  expenses  if  the
maximum  proceeds  are obtained.  To the extent organization  and
offering expenses actually incurred exceed 15% of proceeds,  they
are borne by the General Partners.


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

        During  the offering of Units, the Partnership's  primary
source  of cash flow will be from the sale of Limited Partnership
Units.   The  Partnership offered for sale up to  $24,000,000  of
limited  partnership  interests (the "Units")  (24,000  Units  at
$1,000  per Unit) pursuant to a registration statement  effective
February  1, 1995.  From February1, 1995 to April 14,  1995,  the
minimum  number  of Limited Partnership Units (1,500)  needed  to
form the Partnership were sold and on April 14, 1995, a total  of
2,937.444   Units   ($2,937,444)  were   transferred   into   the
Partnership.   On  January  31, 1997,  the  Partnership  offering
terminated when the maximum subscription limit of 24,000  Limited
Partnership  Units ($24,000,000) was reached.  From  subscription
proceeds, the Partnership paid organization and syndication costs
(which constitute a reduction of capital) of $3,306,859.

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

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

        On  March  28, 1996, the Partnership purchased  a  40.75%
interest in a Garden Ridge store in Pineville, North Carolina for
$3,644,391.  The property is leased to Garden Ridge, L.P. under a
Lease Agreement with a primary term of 20 years and annual rental
payments of $383,973.  The remaining interest in the property was
purchased  by  AEI  Net Lease Income & Growth  Fund  XIX  Limited
Partnership  and  AEI Net Lease Income & Growth Fund  XX  Limited
Partnership, affiliates of the Partnership.

        On  August  29, 1996, the Partnership purchased  a  67.8%
interest in a Champps Americana restaurant in Columbus, Ohio  for
$1,808,880.    The   property  is  leased  to  Americana   Dining
Corporation  under a Lease Agreement with a primary  term  of  20
years  and  annual  rental payments of $191,259.   The  remaining
interest  in  the property was purchased by AEI Real Estate  Fund
XVIII Limited Partnership, an affiliate of the Partnership.

        On March 14, 1997, the Partnership purchased a parcel  of
land in San Antonio, Texas for $1,032,299.  The land is leased to
Champps Americana, Inc. (Champps) under a Lease Agreement with  a
primary  term of 20 years and annual rental payments of  $83,451.
Effective  September 9, 1997, the annual rent  was  increased  to
$128,156.   The  Partnership  also  entered  into  a  Development
Financing  Agreement  under which the  Partnership  will  advance
funds  to  Champps  for the construction of a  Champps  Americana
restaurant  on  the  site.   Through  September  30,  1997,   the
Partnership had advanced $1,172,890 for the construction  of  the
property and was charging interest on the advances at a  rate  of
7.0%.    Effective  September  9,  1997,  the  Partnership  began
charging  interest on the Note at the rate of 10.75%.  The  total
purchase  price,  including  the  cost  of  the  land,  will   be
approximately  $2,804,000.  After the construction  is  complete,
the  Lease  Agreement  will be amended to require  annual  rental
payments of approximately $300,000.


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

        On  March  19, 1997, the Partnership purchased a  Denny's
restaurant in Covington, Louisiana for $1,279,039.  The  property
is  leased  to Huntington Restaurants Group, Inc. under  a  Lease
Agreement  with  a  primary term of 20 years  and  annual  rental
payments of $141,243.

        On  April  21,  1997, the Partnership purchased  a  49.6%
interest  in  a  parcel  of  land  in  Schaumburg,  Illinois  for
$876,387.   The land is leased to Champps under a Lease Agreement
with  a  primary term of 20 years and annual rental  payments  of
$66,906.    The  Partnership  also  entered  into  a  Development
Financing  Agreement  under which the  Partnership  will  advance
funds  to  Champps  for the construction of a  Champps  Americana
restaurant   on  the  site.   Through  September 30,  1997,   the
Partnership  had  advanced $212,034 for the construction  of  the
property and was charging interest on the advances at a  rate  of
7.0%.   The  Partnership's  share of the  total  purchase  price,
including the cost of the land, will be approximately $2,128,000.
After  the construction is complete, the Lease Agreement will  be
amended  to  require  annual  rental  payments  of  approximately
$229,000.  The remaining interests in the property are  owned  by
AEI  Income  & Growth Fund XX Limited Partnership and  Net  Lease
Income & Growth Fund 84-A Limited Partnership, affiliates of  the
Partnership.

        On  July  8, 1997, the Partnership purchased a parcel  of
land in Livonia, Michigan for $1,074,384.  The land is leased  to
Champps  under a Lease Agreement with a primary term of 20  years
and  annual  rental  payments of $75,207.  The  Partnership  also
entered  into a Development Financing Agreement under  which  the
Partnership will advance funds to Champps for the construction of
a  Champps  Americana restaurant on the site.  Through  September
30,   1997,  the  Partnership  had  advanced  $362,611  for   the
construction  of  the property and was charging interest  on  the
advances  at a rate of 7.0%.  The total purchase price, including
the  cost  of the land, will be approximately $3,970,000.   After
the construction is complete, the Lease Agreement will be amended
to require annual rental payments of approximately $427,000.

        On  July  31,  1997, the Partnership  purchased  a  93.1%
interest  in a Caribou Coffee store in Charlotte, North  Carolina
for  $1,285,443.   The  property  is  leased  to  Caribou  Coffee
Company, Inc. under a Lease Agreement with a primary term  of  18
years  and  annual  rental payments of $146,438.   The  remaining
interest in the property is owned by AEI Institutional Net  Lease
Fund '93, an affiliate of the Partnership.

        On  September  30, 1997, the Partnership sold  a  7.0899%
interest in the Champps Americana restaurant in Columbus, Ohio to
an  unrelated  third party.  The Partnership  received  net  sale
proceeds  of  $225,622 which resulted in a net gain  of  $42,582.
The  total  cost  and  related accumulated  depreciation  of  the
interest sold was $189,156 and $6,116, respectively.

        During  the  first nine months of 1997,  the  Partnership
distributed  net  sale proceeds of $190,810 to  the  Limited  and
General Partners as part of their regular quarterly distributions
which  represented  a  return of capital  of  $7.87  per  Limited
Partnership Unit.  The remaining net sale proceeds will either be
reinvested  in  additional  properties  or  distributed  to   the
Partners in the future.

         After   completion   of  the  acquisition   phase,   the
Partnership's  primary  use  of cash  flow  is  distribution  and
redemption  payments to Partners.  The Partnership  declares  its
regular  quarterly distributions before the end of  each  quarter
and pays the distribution in the first week after the end of each
quarter.    The  Partnership  attempts  to  maintain   a   stable
distribution rate from quarter to quarter.


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

        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.

        On  October  1, 1997, three Limited Partners  redeemed  a
total of 171.1 Partnership Units for $154,021 in accordance  with
the  Partnership Agreement.  The Partnership acquired these Units
using  Net  Cash Flow from operations.  The redemptions  increase
the   remaining  Limited  Partners'  ownership  interest  in  the
Partnership.

        Until  capital is invested in properties, the Partnership
will  remain extremely liquid.  At September 30, 1997, $4,756,838
or  24%  of  the  Partnership's  assets  were  in  cash  or  cash
equivalents  (including  accrued  interest  receivable).    After
completion of property acquisitions, the Partnership will attempt
to   maintain  a  cash  reserve  of  only  approximately  1%   of
subscription proceeds.  Because properties are purchased for cash
and  leased under triple-net leases, this is considered  adequate
to satisfy most contingencies.


                   PART II - OTHER INFORMATION
                                
ITEM 1.LEGAL PROCEEDINGS

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

ITEM 2.CHANGES IN SECURITIES

      None.

ITEM 3.DEFAULTS UPON SENIOR SECURITIES

      None.

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

      None

ITEM 5.OTHER INFORMATION

      None.

                   PART II - OTHER INFORMATION
                           (Continued)
                                
ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K

      a. Exhibits -
                           Description

         10.1  Purchase  Agreement dated  September
               16,   1997  between  the  Partnership  and
               Richard  J. Abbott and Marjory  T.  Abbott
               relating to the property at 161 E.  Campus
               View Boulevard, Columbus, Ohio.

         27    Financial Data Schedule  for  period
               ended September 30, 1997.

         b.    Reports filed on Form  8-K  -
               None.


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


Dated:  November 4, 1997      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)