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

                            FORM 10-Q

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

         For the quarterly period ended:  March 31, 2009

               Commission File Number:  000-29274

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

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

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

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

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

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

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

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

  Large accelerated filer           Accelerated filer

  Non-accelerated filer             Smaller reporting company  [X]

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


        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP

                              INDEX


Part I - Financial Information

 Item 1. Financial Statements:

         Balance Sheet as of March 31, 2009 and December 31, 2008

         Statements for the Three Months ended March 31, 2009 and 2008:

           Operations

           Cash Flows

           Changes in Partners' Capital

         Notes to Financial Statements

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

 Item 3. Quantitative and Qualitative Disclosures About Market Risk

 Item 4. Controls and Procedures

Part II - Other Information

 Item 1. Legal Proceedings

 Item 1A.Risk Factors

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

 Item 3. Defaults Upon Senior Securities

 Item 4. Submission of Matters to a Vote of Security  Holders

 Item 5. Other Information

 Item 6. Exhibits

Signatures

<PAGE>
        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
                          BALANCE SHEET
              MARCH 31, 2009 AND DECEMBER 31, 2008

                             ASSETS

                                                    2009          2008
CURRENT ASSETS:
  Cash                                          $ 1,659,818   $ 2,068,293
  Receivables                                         5,353         5,032
                                                 -----------   -----------
      Total Current Assets                        1,665,171     2,073,325
                                                 -----------   -----------
INVESTMENTS IN REAL ESTATE:
  Land                                            4,153,750     4,712,813
  Buildings and Equipment                         9,792,622    10,564,859
  Construction in Progress                          411,128        72,964
  Accumulated Depreciation                       (1,194,009)   (1,376,198)
                                                 -----------   -----------
                                                 13,163,491    13,974,438
  Real Estate Held for Sale                       2,553,539     1,903,539
                                                 -----------   -----------
      Net Investments in Real Estate             15,717,030    15,877,977
                                                 -----------   -----------
           Total  Assets                        $17,382,201   $17,951,302
                                                 ===========   ===========


                    LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
  Payable to AEI Fund Management, Inc.          $    20,927   $    43,300
  Distributions Payable                             315,921       352,283
  Unearned Rent                                      32,001        22,302
                                                 -----------   -----------
      Total Current Liabilities                     368,849       417,885
                                                 -----------   -----------
PARTNERS' CAPITAL:
  General Partners                                    7,700        12,901
  Limited Partners, $1,000 per Unit;
   24,000 Units authorized and issued;
   22,779 Units outstanding                      17,005,652    17,520,516
                                                 -----------   -----------
      Total Partners' Capital                    17,013,352    17,533,417
                                                 -----------   -----------
        Total Liabilities and Partners' Capital $17,382,201   $17,951,302
                                                 ===========   ===========

 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
</PAGE>
<PAGE>
        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
                     STATEMENT OF OPERATIONS
               FOR THE THREE MONTHS ENDED MARCH 31


      bbbbbbbbb                                      2009          2008

RENTAL INCOME                                   $   258,840   $   210,212

EXPENSES:
  Partnership Administration - Affiliates            58,584        55,758
  Partnership Administration and Property
     Management - Unrelated Parties                  12,265        10,847
  Depreciation                                       97,924        76,001
                                                 -----------   -----------
      Total Expenses                                168,773       142,606
                                                 -----------   -----------

OPERATING INCOME                                     90,067        67,606

OTHER INCOME:
  Interest Income                                    17,857        20,991
                                                 -----------   -----------

INCOME FROM CONTINUING OPERATIONS                   107,924        88,597

Income (Loss) from Discontinued Operations         (309,808)      209,744
                                                 -----------   -----------
NET INCOME (LOSS)                               $  (201,884)  $   298,341
                                                 ===========   ===========
NET INCOME (LOSS) ALLOCATED:
  General Partners                              $    (2,019)  $     2,983
  Limited Partners                                 (199,865)      295,358
                                                 -----------   -----------
                                                $  (201,884)  $   298,341
                                                 ===========   ===========
INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT:
  Continuing Operations                         $      4.69   $      3.85
  Discontinued Operations                            (13.46)         9.12
                                                 -----------   -----------
       Total                                    $     (8.77)  $     12.97
                                                 ===========   ===========
Weighted Average Units Outstanding                    22,779       22,779
                                                 ===========   ===========


 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
</PAGE>
<PAGE>
        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
                     STATEMENT OF CASH FLOWS
               FOR THE THREE MONTHS ENDED MARCH 31


                                                     2009         2008

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net Income (Loss)                             $  (201,884)  $   298,341

  Adjustments To Reconcile Net Income
  To Net Cash Provided By Operating Activities:
     Depreciation                                   105,287       118,021
     Real Estate Impairment                         396,839             0
     Gain on Sale of Real Estate                          0       (99,192)
     Increase in Receivables                           (321)            0
     Increase (Decrease) in Payable to
        AEI Fund Management, Inc.                   (22,373)       15,434
     Increase (Decrease) in Unearned Rent             9,699       (11,990)
                                                 -----------   -----------
       Total Adjustments                            489,131        22,273
                                                 -----------   -----------
       Net Cash Provided By
           Operating Activities                     287,247       320,614
                                                 -----------   -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Investments in Real Estate                       (341,179)   (3,626,652)
  Proceeds from Sale of Real Estate                       0       258,749
                                                 -----------   -----------
       Net Cash Used For
           Investing Activities                    (341,179)   (3,367,903)
                                                 -----------   -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Distributions Paid to Partners                   (354,543)     (383,452)
                                                 -----------   -----------

NET DECREASE IN CASH                               (408,475)   (3,430,741)

CASH, beginning of period                         2,068,293     4,904,162
                                                 -----------   -----------
CASH, end of period                             $ 1,659,818   $ 1,473,421
                                                 ===========   ===========

 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 THREE MONTHS ENDED MARCH 31


                                                                  Limited
                                                                Partnership
                             General      Limited                  Units
                             Partners     Partners    Total     Outstanding


BALANCE, December 31, 2007  $ 15,015   $17,729,799  $17,744,814   22,779.11

  Distributions Declared      (4,132)     (408,996)    (413,128)

  Net Income                   2,983       295,358      298,341
                             --------   -----------  -----------  ----------
BALANCE, March 31, 2008     $ 13,866   $17,616,161  $17,630,027   22,779.11
                             ========   ===========  ===========  ==========


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

  Distributions Declared      (3,182)     (314,999)    (318,181)

  Net Loss                    (2,019)     (199,865)    (201,884)
                             --------   -----------  -----------  ----------
BALANCE, March 31, 2009     $  7,700   $17,005,652  $17,013,352   22,779.11
                             ========   ===========  ===========  ==========


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

        AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
                  NOTES TO FINANCIAL STATEMENTS
                         MARCH 31, 2009

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

(2)  Organization -

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

     The   terms  of  the  Partnership  offering  called  for   a
     subscription  price of $1,000 per Limited Partnership  Unit,
     payable   on  acceptance  of  the  offer.   The  Partnership
     commenced   operations  on  April  14,  1995  when   minimum
     subscriptions    of   1,500   Limited   Partnership    Units
     ($1,500,000)  were  accepted.   On  January  31,  1997,  the
     offering  terminated when the maximum subscription limit  of
     24,000  Limited  Partnership Units was reached.   Under  the
     terms  of  the  Limited Partnership Agreement,  the  Limited
     Partners   and   General  Partners  contributed   funds   of
     $24,000,000 and $1,000, respectively.

     During operations, any Net Cash Flow, as defined, which  the
     General Partners determine to distribute will be distributed
     90% to the Limited Partners and 10% to the General Partners;
     provided,  however, that such distributions to  the  General
     Partners will be subordinated to the Limited Partners  first
     receiving an annual, noncumulative distribution of Net  Cash
     Flow equal to 10% of their Adjusted Capital Contribution, as
     defined,  and, provided further, that in no event  will  the
     General Partners receive less than 1% of such Net Cash  Flow
     per  annum.  Distributions to Limited Partners will be  made
     pro rata by Units.

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

(2)  Organization - (Continued)

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

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

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

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

(3)  Reclassification -

     Certain  items  related to discontinued  operations  in  the
     prior  period's financial statements have been  reclassified
     to  conform  to  2009 presentation.  These reclassifications
     had  no  effect  on Partners' capital, net  income  or  cash
     flows.


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

(4)  Investments in Real Estate -

     On  January  31,  2008,  the  Partnership  purchased  a  54%
     interest  in  a Best Buy store in Eau Claire, Wisconsin  for
     $3,637,706.  The property is leased to Best Buy Stores, L.P.
     under a Lease Agreement with a remaining primary term of  10
     years  and initial annual rent of $256,001 for the  interest
     purchased.   The  remaining interests in the  property  were
     purchased by AEI Income & Growth Fund 23 LLC and AEI  Income
     & Growth Fund 26 LLC, affiliates of the Partnership.

     On October 2, 2008, the Partnership purchased a 55% interest
     in  a Fresenius Medical Center in Shreveport, Louisiana  for
     $1,360,617.    The   property  is  leased   to   Bio-Medical
     Applications  of Louisiana, LLC, a subsidiary  of  Fresenius
     Medical Care Holdings, Inc., under a Lease Agreement with  a
     remaining primary term of 9.8 years and initial annual  rent
     of  $102,520  for  the  interest purchased.   The  remaining
     interest  in  the  property was purchased by  AEI  Income  &
     Growth Fund 24 LLC, an affiliate of the Partnership.

     On  November  21,  2008,  the Partnership  purchased  a  63%
     interest in a parcel of land in Rapid City, South Dakota for
     $604,043,  including acquisition expenses.  The  Partnership
     obtained  title to the land in the form of an undivided  fee
     simple interest in the 63% interest purchased.  Simultaneous
     with  the purchase of the land, the Partnership entered into
     a   Development   Financing  Agreement   under   which   the
     Partnership will advance funds to Brad and Dad, LLC for  the
     construction of a Tractor Supply Company store on the  site.
     Through   March  31,  2009,  the  Partnership  had  advanced
     $411,128 for the construction of the building.  The purchase
     price,  including  the  cost of  the  land  and  acquisition
     expenses,  will be approximately $1,940,000.  The  remaining
     interest  in  the  property was purchased by  AEI  Income  &
     Growth Fund 27 LLC, an affiliate of the Partnership.

     The  property  is leased to Tractor Supply Company  under  a
     Lease  Agreement with a primary term of 15 years and initial
     annual   rent  of  $141,750  for  the  interest   purchased.
     Pursuant to the Lease, the tenant will commence paying  rent
     on  the  day the store opens for business, which is expected
     to  be  in May 2009.  Pursuant to the development agreement,
     for  the  period from November 21, 2008 to the day that  the
     tenant commences paying rent, Brad and Dad, LLC will pay the
     Partnership interest at a rate of 6.9% on the purchase price
     of the land and the amounts advanced for construction of the
     building.   Pursuant to the Lease, any improvements  to  the
     land during the term of the Lease become the property of the
     Partnership.

(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.

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

(6)  Discontinued Operations -

     On  January  15,  2008, the Partnership sold  its  remaining
     13.4184%  interest  in  the  KinderCare  daycare  center  in
     Kimberly,  Wisconsin  to  an  unrelated  third  party.   The
     Partnership  received net sale proceeds of  $258,749,  which
     resulted  in  a net gain of $99,192.  The cost  and  related
     accumulated  depreciation of the interest sold was  $182,253
     and $22,696, respectively.

     In  March 2008, the Partnership entered into an agreement to
     sell  the Johnny Carino's restaurant in Laredo, Texas to  an
     unrelated  third  party.  On May 15, 2008, the  sale  closed
     with  the  Partnership receiving net proceeds of $2,896,269,
     which  resulted in a net gain of $536,717.  At the  time  of
     sale,  the  cost  and related accumulated  depreciation  was
     $2,605,079 and $245,527, respectively.

     On  December  23, 2008, the Partnership sold 7.767%  of  the
     KinderCare  daycare  center  in  Ballwin,  Missouri  to   an
     unrelated  third party.  The Partnership received  net  sale
     proceeds  of  $175,132, which resulted  in  a  net  gain  of
     $80,947.   The cost and related accumulated depreciation  of
     the  interest  sold was $117,886 and $23,701,  respectively.
     The  Partnership is attempting to sell its remaining 92.233%
     interest  in  the property.  At March 31, 2009 and  December
     31,  2008,  the property was classified as Real Estate  Held
     for Sale with a book value of $1,118,440.

     The  Partnership is attempting to sell its 20.4025% interest
     in  the Winn-Dixie store in Panama City, Florida.  At  March
     31,  2009 and December 31, 2008, the property was classified
     as Real Estate Held for Sale with a book value of $785,099.

     In   March  2009,  Tumbleweed,  Inc.,  the  tenant  of   the
     Tumbleweed  restaurant  in  Fort Wayne,  Indiana  filed  for
     Chapter  11  bankruptcy reorganization.  Rents  are  current
     through  March  2009.  Tumbleweed closed the restaurant  and
     has  filed a motion with the bankruptcy court to reject  the
     Lease for this property.  If the court approves this motion,
     which  is  likely,  Tumbleweed would be required  to  return
     possession  of  the  property to  the  Partnership  and  the
     Partnership would be responsible for real estate  taxes  and
     other  costs associated with maintaining the property.   The
     Partnership  is preparing to market the property  for  sale.
     Based  on an analysis of market conditions in the area,  the
     Partnership  has  determined the  property  is  impaired  in
     accordance  with the requirements of Statement of  Financial
     Accounting Standards No. 144, "Accounting for the Impairment
     or  Disposal  of  Long-Lived Assets".  As a result,  in  the
     first  quarter of 2009, a charge to discontinued  operations
     for real estate impairment of $396,839 was recognized, which
     was  the difference between the book value at March 31, 2009
     of $1,046,839 and the estimated fair value of $650,000.  The
     charge  was  recorded  against the  cost  of  the  land  and
     building.  At March 31, 2009, the property was classified as
     Real Estate Held for Sale.

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

(6)  Discontinued Operations - (Continued)

     During  the  first  three  months  of  2009  and  2008,  the
     Partnership  distributed net sale proceeds  of  $17,938  and
     $95,960 to the Limited and General Partners as part of their
     quarterly  distributions,  which  represented  a  return  of
     capital  of  $0.78  and $4.17 per Limited Partnership  Unit,
     respectively.  The Partnership anticipates the remaining net
     sale  proceeds  will  either  be  reinvested  in  additional
     property or distributed to the Partners in the future.

     The financial results for these properties are reflected  as
     Discontinued   Operations  in  the  accompanying   financial
     statements.   The following are the results of  discontinued
     operations for the three months ended March 31:


                                                      2009        2008

     Rental Income                                $  94,476   $ 153,054
     Property Management Expenses                       (82)       (482)
     Depreciation                                    (7,363)    (42,020)
     Real Estate Impairment                        (396,839)          0
     Gain on Disposal of Real Estate                      0      99,192
                                                   ---------   ---------
       Income (Loss) from Discontinued Operations $(309,808)  $ 209,744
                                                   =========   =========

(7)  Fair Value Measurements -

     Statement  of  Financial Accounting Standard No.  157  "Fair
     Value   Measurements"  ("SFAS  157")  defines  fair   value,
     outlines  a framework for measuring fair value, details  the
     required  disclosures and was effective January 1, 2008  for
     certain financial assets and liabilities and January 1, 2009
     for certain nonfinancial assets and liabilities.

     Under  SFAS  157, fair value is defined as  the  price  that
     would  be  received to sell an asset or paid to  transfer  a
     liability   in   an  orderly  transaction   between   market
     participants  at  the measurement date in the  principal  or
     most  advantageous market.  SFAS 157 establishes a hierarchy
     in determining the fair value of an asset or liability.  The
     fair  value  hierarchy  has three  levels  of  inputs,  both
     observable   and   unobservable.  SFAS  157   requires   the
     utilization  of  the  lowest  possible  level  of  input  to
     determine  fair value. Level 1 inputs include quoted  market
     prices   in  an  active  market  for  identical  assets   or
     liabilities.   Level 2 inputs are market  data,  other  than
     Level  1  inputs,  that are observable  either  directly  or
     indirectly. Level 2 inputs include quoted market prices  for
     similar  assets or liabilities, quoted market prices  in  an
     inactive  market, and other observable information that  can
     be   corroborated  by  market  data.   Level  3  inputs  are
     unobservable and corroborated by little or no market data.

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

(7)  Fair Value Measurements - (Continued)

     The  Partnership  had  no financial  assets  or  liabilities
     measured  at fair value on a recurring basis or nonrecurring
     basis    that   would   require   disclosure   under    this
     pronouncement.

     In  accordance with the provisions of Statement of Financial
     Accounting Standards No. 144, "Accounting for the Impairment
     or   Disposal  of  Long-Lived  Assets,"  ("SFAS  144")   the
     Tumbleweed  restaurant, with a carrying amount of $1,046,839
     at  March  31, 2009, was written down to its fair  value  of
     $650,000  after completing our SFAS 144 valuation  analysis.
     The  fair  value  of the property was based upon  comparable
     sales  of similar properties, which are considered  Level  3
     inputs  in  the SFAS 157 valuation hierarchy.  The resulting
     impairment  charge  in  the first quarter  of  $396,839  was
     included in earnings for the period.

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

        This  section contains "forward looking statements" which
represent management's expectations or beliefs concerning  future
events, including statements regarding anticipated application of
cash, expected returns from rental income, growth in revenue, the
sufficiency  of  cash  to  meet  operating  expenses,  rates   of
distribution,  and  other  matters.   These,  and  other  forward
looking  statements,  should be evaluated in  the  context  of  a
number  of  factors  that may affect the Partnership's  financial
condition and results of operations, including the following:

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

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

    resolution  by  the General Partners of  conflicts  with
    which they may be confronted;

    the   success  of  the  General  Partners  of   locating
    properties with favorable risk return characteristics;

    the effect of tenant defaults; and

    the  condition of the industries in which the  tenants  of
    properties owned by the Partnership operate.


Application of Critical Accounting Policies

        The preparation of the Partnership's financial statements
requires  management to make estimates and assumptions  that  may
affect the reported amounts of assets, liabilities, revenues  and
expenses,  and  related  disclosure  of  contingent  assets   and
liabilities. Management evaluates these estimates on  an  ongoing
basis,  including  those related to the carrying  value  of  real
estate  and  the  allocation  by AEI  Fund  Management,  Inc.  of
expenses  to  the  Partnership as opposed  to  other  funds  they
manage.

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

        Prior  to  January  1,  2009, the  Partnership  purchased
properties and recorded them in the financial statements at  cost
(including  capitalized acquisition expenses).  For  acquisitions
completed  on  or  after  January  1,  2009,  acquisition-related
transaction costs will be expensed as incurred as a result of the
adoption  of  Statement  of  Financial Accounting  Standards  No.
141(R),  "Business  Combinations".  The Partnership  tests  long-
lived  assets  for  recoverability  when  events  or  changes  in
circumstances  indicate  that  the  carrying  value  may  not  be
recoverable.   For  properties  the  Partnership  will  hold  and
operate, management determines whether impairment has occurred by
comparing the property's probability-weighted cash flows  to  its
current carrying value.  For properties held for sale, management
determines  whether  impairment has  occurred  by  comparing  the
property's estimated fair value less cost to sell to its  current
carrying  value.   If  the carrying value  is  greater  than  the
realizable  value, an impairment loss is recorded to  reduce  the
carrying value of the property to its realizable value.   Changes
in  these  assumptions or analysis may cause material changes  in
the carrying value of the properties.

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

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

Results of Operations

        For  the three months ended March 31, 2009 and 2008,  the
Partnership  recognized rental income from continuing  operations
of  $258,840 and $210,212, respectively.  In 2009, rental  income
increased  due  to  additional rent received  from  two  property
acquisitions in 2008 and a rent increase on one property.

        For  the three months ended March 31, 2009 and 2008,  the
Partnership  incurred  Partnership administration  expenses  from
affiliated  parties of $58,584 and $55,758, respectively.   These
administration  expenses  include  costs  associated   with   the
management of the properties, processing distributions, reporting
requirements and communication with the Limited Partners.  During
the   same   periods,   the  Partnership   incurred   Partnership
administration  and property management expenses  from  unrelated
parties  of  $12,265 and $10,847, respectively.   These  expenses
represent  direct payments to third parties for legal and  filing
fees,  direct  administrative costs, outside audit costs,  taxes,
insurance and other property costs.

        For  the three months ended March 31, 2009 and 2008,  the
Partnership  recognized interest income of $17,857  and  $20,991,
respectively.   In  2009, interest income decreased  due  to  the
Partnership having less money invested in a money market  account
due  to  property  acquisitions and lower money market  rates  in
2009,  when  compared  to 2008.  These decreases  were  partially
offset by interest received on construction advances in 2009.

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

        In  accordance  with  Statement of  Financial  Accounting
Standards No. 144, "Accounting for the Impairment or Disposal  of
Long-Lived  Assets",  upon complete disposal  of  a  property  or
classification of a property as Real Estate Held  for  Sale,  the
Partnership  includes  the operating  results  and  sale  of  the
property   in   discontinued  operations.    In   addition,   the
Partnership reclassifies the prior periods' operating results  of
the  property  to discontinued operations.  For the three  months
ended  March  31, 2009, the Partnership recognized  a  loss  from
discontinued operations of $309,808, representing a  real  estate
impairment loss of $396,839, which was partially offset by rental
income  less  property management expenses  and  depreciation  of
$87,031.   For  the  three  months  ended  March  31,  2008,  the
Partnership  recognized  income from discontinued  operations  of
$209,744,  representing  rental income less  property  management
expenses  and  depreciation of $110,552 and gain on  disposal  of
real estate of $99,192.

        On  January 15, 2008, the Partnership sold its  remaining
13.4184%  interest in the KinderCare daycare center in  Kimberly,
Wisconsin to an unrelated third party.  The Partnership  received
net  sale proceeds of $258,749, which resulted in a net  gain  of
$99,192.   The cost and related accumulated depreciation  of  the
interest sold was $182,253 and $22,696, respectively.

        In  March 2008, the Partnership entered into an agreement
to  sell  the Johnny Carino's restaurant in Laredo, Texas  to  an
unrelated third party.  On May 15, 2008, the sale closed with the
Partnership receiving net proceeds of $2,896,269, which  resulted
in  a  net  gain of $536,717.  At the time of sale, the cost  and
related  accumulated  depreciation was $2,605,079  and  $245,527,
respectively.

        On  December 23, 2008, the Partnership sold 7.767% of the
KinderCare  daycare center in Ballwin, Missouri to  an  unrelated
third  party.   The  Partnership received net  sale  proceeds  of
$175,132, which resulted in a net gain of $80,947.  The cost  and
related  accumulated  depreciation  of  the  interest  sold   was
$117,886   and   $23,701,  respectively.   The   Partnership   is
attempting  to  sell  its  remaining  92.233%  interest  in   the
property.  At March 31, 2009 and December 31, 2008, the  property
was classified as Real Estate Held for Sale with a book value  of
$1,118,440.

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

        In  March  2009,  Tumbleweed, Inc.,  the  tenant  of  the
Tumbleweed restaurant in Fort Wayne, Indiana filed for Chapter 11
bankruptcy reorganization.  Rents are current through March 2009.
Tumbleweed closed the restaurant and has filed a motion with  the
bankruptcy court to reject the Lease for this property.   If  the
court approves this motion, which is likely, Tumbleweed would  be
required  to return possession of the property to the Partnership
and  the  Partnership would be responsible for real estate  taxes
and  other  costs associated with maintaining the property.   The
Partnership is preparing to market the property for sale.   Based
on  an analysis of market conditions in the area, the Partnership
has  determined the property is impaired in accordance  with  the
requirements  of Statement of Financial Accounting Standards  No.
144,  Accounting  for  the Impairment or Disposal  of  Long-Lived
Assets.   As a result, in the first quarter of 2009, a charge  to
discontinued  operations for real estate impairment  of  $396,839
was  recognized, which was the difference between the book  value
at  March 31, 2009 of $1,046,839 and the estimated fair value  of
$650,000.  The charge was recorded against the cost of  the  land
and building.  At March 31, 2009, the property was classified  as
Real Estate Held for Sale     .


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

         Management  believes  inflation  has  not  significantly
affected  income  from  operations.   Leases  may  contain   rent
increases, based on the increase in the Consumer Price Index over
a  specified period, which will result in an increase  in  rental
income over the term of the leases.  Inflation also may cause the
real  estate  to  appreciate in value.   However,  inflation  and
changing  prices  may  have an adverse impact  on  the  operating
margins  of  the  properties' tenants, which could  impair  their
ability  to  pay rent and subsequently reduce the Net  Cash  Flow
available for distributions.

Liquidity and Capital Resources

        During  the  three  months  ended  March  31,  2009,  the
Partnership's  cash balances decreased $408,475 as  a  result  of
cash  used  to purchase property and distributions  paid  to  the
Partners  in  excess of cash generated from operating activities.
During  the  three months ended March 31, 2008, the Partnership's
cash  balances decreased $3,430,741 as a result of cash  used  to
purchase  property  and distributions paid  to  the  Partners  in
excess  of  cash generated from operating activities, which  were
partially offset by cash generated from the sale of property.

        Net  cash provided by operating activities decreased from
$320,614 in 2008 to $287,247 in 2009 as a result of a decrease in
total  rental  and  interest  income  in  2009,  an  increase  in
Partnership  administration and property management  expenses  in
2009  and  net timing differences in the collection  of  payments
from the tenants 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 three  months  ended
March 31, 2008, the Partnership generated cash flow from the sale
of  real estate of $258,749.  During the three months ended March
31,   2009  and  2008,  the  Partnership  expended  $341,179  and
$3,626,652,  respectively, to invest in real  properties  as  the
Partnership reinvested cash generated from property sales.

        On  January  31,  2008, the Partnership purchased  a  54%
interest  in  a  Best  Buy  store in Eau  Claire,  Wisconsin  for
$3,637,706.   The  property is leased to Best  Buy  Stores,  L.P.
under a Lease Agreement with a remaining primary term of 10 years
and  initial annual rent of $256,001 for the interest  purchased.
The  remaining  interests in the property were purchased  by  AEI
Income & Growth Fund 23 LLC and AEI Income & Growth Fund 26  LLC,
affiliates of the Partnership.

        On  October  2,  2008, the Partnership  purchased  a  55%
interest  in a Fresenius Medical Center in Shreveport,  Louisiana
for   $1,360,617.    The  property  is  leased   to   Bio-Medical
Applications of Louisiana, LLC, a subsidiary of Fresenius Medical
Care  Holdings,  Inc., under a Lease Agreement with  a  remaining
primary term of 9.8 years and initial annual rent of $102,520 for
the  interest purchased.  The remaining interest in the  property
was purchased by AEI Income & Growth Fund 24 LLC, an affiliate of
the Partnership.

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

        On  November  21, 2008, the Partnership purchased  a  63%
interest  in  a  parcel of land in Rapid City, South  Dakota  for
$604,043,   including  acquisition  expenses.   The   Partnership
obtained title to the land in the form of an undivided fee simple
interest  in the 63% interest purchased.  Simultaneous  with  the
purchase  of the land, the Partnership entered into a Development
Financing  Agreement  under which the  Partnership  will  advance
funds  to  Brad and Dad, LLC for the construction  of  a  Tractor
Supply  Company store on the site.  Through March 31,  2009,  the
Partnership  had  advanced $411,128 for the construction  of  the
building.  The purchase price, including the cost of the land and
acquisition  expenses,  will  be approximately  $1,940,000.   The
remaining interest in the property was purchased by AEI Income  &
Growth Fund 27 LLC, an affiliate of the Partnership.

        The property is leased to Tractor Supply Company under  a
Lease  Agreement  with  a primary term of 15  years  and  initial
annual rent of $141,750 for the interest purchased.  Pursuant  to
the  Lease, the tenant will commence paying rent on the  day  the
store  opens for business, which is expected to be in  May  2009.
Pursuant  to  the  development agreement,  for  the  period  from
November  21,  2008 to the day that the tenant  commences  paying
rent,  Brad and Dad, LLC will pay the Partnership interest  at  a
rate  of  6.9% on the purchase price of the land and the  amounts
advanced  for  construction  of the building.   Pursuant  to  the
Lease, any improvements to the land during the term of the  Lease
become the property of the Partnership.

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

        For  the three months ended March 31, 2009 and 2008,  the
Partnership  declared  distributions of  $318,181  and  $413,128,
respectively, which were distributed 99% to the Limited  Partners
and  1%  to the General Partners.  The Limited Partners  received
distributions  of $314,999 and $408,996 and the General  Partners
received  distributions  of $3,182 and $4,132  for  the  periods,
respectively.  In March 2008, the Partnership declared a  special
distribution  of  net  sale  proceeds  of  $58,586.    In   2009,
distributions  were lower due to a decrease in  the  distribution
rate  per  Unit,  effective  January 1,  2009,  and  the  special
distribution in March 2008.

        During  the  first  three months of 2009  and  2008,  the
Partnership distributed net sale proceeds of $17,938 and  $95,960
to  the  Limited and General Partners as part of their  quarterly
distributions, which represented a return of capital of $0.78 and
$4.17   per   Limited   Partnership  Unit,   respectively.    The
Partnership  anticipates the remaining  net  sale  proceeds  will
either be reinvested in additional property or distributed to the
Partners in the future.

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 will not be obligated
to purchase in any year any number of Units that, when aggregated
with  all  other transfers of Units that have occurred since  the
beginning   of  the  same  calendar  year  (excluding   Permitted
Transfers as defined in the Partnership Agreement), would  exceed
5%  of the total number of Units outstanding on January 1 of such
year.  In no event shall the Partnership be obligated to purchase
Units if, in the sole discretion of the Managing General Partner,
such  purchase  would  impair the capital  or  operation  of  the
Partnership.

        During 2009 and 2008, the Partnership did not redeem  any
Units  from the Limited Partners.  In prior years, a total of  60
Limited   Partners  redeemed  1,220.89  Partnership   Units   for
$958,469.    The  redemptions  increase  the  remaining   Limited
Partners' ownership interest in the Partnership.

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

The Economy and Market Conditions

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

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

       Not required for a smaller reporting company.

ITEM 4. CONTROLS AND PROCEDURES.

       (a)  Disclosure Controls and Procedures.

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

       (b)  Changes in Internal Control Over Financial Reporting.

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


                   PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

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

ITEM 1A.  RISK FACTORS.

       Not required for a smaller reporting company.


                   PART II - OTHER INFORMATION
                           (Continued)

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

       (a) None.

       (b) Not applicable.

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

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

       None.

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

       None.

ITEM 5. OTHER INFORMATION.

       None.

ITEM 6. EXHIBITS.

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

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

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



                           SIGNATURES

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


Dated:  May 12, 2009          AEI Income & Growth Fund XXI
                              Limited Partnership
                              By:  AEI Fund Management XXI, Inc.
                              Its: Managing General Partner



                              By: /s/ Robert P Johnson
                                      Robert P. Johnson
                                      President
                                      (Principal Executive Officer)



                              By: /s/ Patrick W Keene
                                      Patrick W. Keene
                                      Chief Financial Officer
                                      (Principal Accounting Officer)