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, 2008

               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  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, 2008 and December 31, 2007

         Statements for the Three Months ended March 31, 2008 and 2007:

           Income

           Cash Flows

           Changes in Partners' Capital

         Notes to Financial Statements

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

 Item 3. Quantitative and Qualitative Disclosures About Market Risk

 Item 4T.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, 2008 AND DECEMBER 31, 2007

                             ASSETS

                                                     2008           2007
CURRENT ASSETS:
  Cash and Cash Equivalents                      $ 1,473,421    $ 4,904,162

INVESTMENTS IN REAL ESTATE:
  Land                                             4,449,307      4,759,346
  Buildings and Equipment                         11,319,109      9,987,497
  Accumulated Depreciation                        (1,515,787)    (1,643,293)
                                                  -----------    -----------
                                                  14,252,629     13,103,550
  Real Estate Held for Sale                        2,359,552        159,557
                                                  -----------    -----------
      Net Investments in Real Estate              16,612,181     13,263,107
                                                  -----------    -----------
          Total Assets                           $18,085,602    $18,167,269
                                                  ===========    ===========

                      LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
  Payable to AEI Fund Management, Inc.           $    20,410    $     4,976
  Distributions Payable                              410,869        381,193
  Unearned Rent                                       24,296         36,286
                                                  -----------    -----------
      Total Current Liabilities                      455,575        422,455
                                                  -----------    -----------
PARTNERS' CAPITAL:
  General Partners                                    13,866         15,015
  Limited Partners, $1,000 per Unit;
   24,000 Units authorized and issued;
   22,779 Units outstanding                       17,616,161     17,729,799
                                                  -----------    -----------
      Total Partners' Capital                     17,630,027     17,744,814
                                                  -----------    -----------
        Total Liabilities and Partners' Capital  $18,085,602    $18,167,269
                                                  ===========    ===========

 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 THREE MONTHS ENDED MARCH 31


                                                      2008           2007

RENTAL INCOME                                     $   307,004    $   256,253

EXPENSES:
   Partnership Administration - Affiliates             55,758         53,616
   Partnership Administration and Property
      Management - Unrelated Parties                   11,329         12,462
   Depreciation                                       103,578         85,071
                                                   -----------    -----------
        Total Expenses                                170,665        151,149
                                                   -----------    -----------

OPERATING INCOME                                      136,339        105,104

OTHER INCOME:
  Interest Income                                      20,991         18,443
                                                   -----------    -----------

INCOME FROM CONTINUING OPERATIONS                     157,330        123,547

Income from Discontinued Operations                   141,011        186,640
                                                   -----------    -----------
NET INCOME                                        $   298,341    $   310,187
                                                   ===========    ===========
NET INCOME ALLOCATED:
   General Partners                               $     2,983    $     3,102
   Limited Partners                                   295,358        307,085
                                                   -----------    -----------
                                                  $   298,341    $   310,187
                                                   ===========    ===========
INCOME PER LIMITED PARTNERSHIP UNIT:
  Continuing Operations                           $      6.84    $      5.36
  Discontinued Operations                                6.13           8.11
                                                   -----------    -----------
      Total                                       $     12.97    $     13.47
                                                   ===========    ===========
Weighted Average Units Outstanding                     22,779         22,802
                                                   ===========    ===========


 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


                                                        2008         2007

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net Income                                       $   298,341  $   310,187

   Adjustments To Reconcile Net Income
   To Net Cash Provided By Operating Activities:
     Depreciation                                       118,021      115,828
     Gain on Sale of Real Estate                        (99,192)     (59,412)
     Increase (Decrease) in Payable to
        AEI Fund Management, Inc.                        15,434      (35,839)
     Decrease in Unearned Rent                          (11,990)      (6,191)
                                                     -----------  -----------
        Total Adjustments                                22,273       14,386
                                                     -----------  -----------
        Net Cash Provided By
            Operating Activities                        320,614      324,573
                                                     -----------  -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Investments in Real Estate                       (3,626,652)           0
    Proceeds from Sale of Real Estate                   258,749      509,303
                                                     -----------  -----------
        Net Cash Provided By (Used For)
           Investing Activities                      (3,367,903)     509,303
                                                     -----------  -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Increase (Decrease) in Distributions Payable          29,676     (118,183)
   Distributions to Partners                           (413,128)    (409,087)
                                                     -----------  -----------
             Net Cash Used For
               Financing Activities                    (383,452)    (527,270)
                                                     -----------  -----------
NET INCREASE (DECREASE) IN CASH
    AND CASH EQUIVALENTS                             (3,430,741)     306,606

CASH AND CASH EQUIVALENTS, beginning of period        4,904,162    1,588,082
                                                     -----------  -----------
CASH AND CASH EQUIVALENTS, end of period            $ 1,473,421  $ 1,894,688
                                                     ===========  ===========


 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, 2006  $ 11,566  $17,388,339  $17,399,905    22,802.45

  Distributions               (4,091)    (404,996)    (409,087)

  Net Income                   3,102      307,085      310,187
                             --------  -----------  -----------  -----------
BALANCE, March 31, 2007     $ 10,577  $17,290,428  $17,301,005    22,802.45
                             ========  ===========  ===========  ===========


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

  Distributions               (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
                             ========  ===========  ===========  ===========


 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
                         MARCH 31, 2008

(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-KSB.

(2)  Organization -

     AEI   Income   &   Growth   Fund  XXI  Limited   Partnership
     ("Partnership")  was formed to acquire and lease  commercial
     properties   to   operating  tenants.    The   Partnership's
     operations  are  managed by AEI Fund  Management  XXI,  Inc.
     ("AFM"),  the Managing General Partner.  Robert P.  Johnson,
     the  President  and  sole 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  2008 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
     $3,626,652.  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.  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.

(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.

(6)  Discontinued Operations -

     During the first three months of 2007, the Partnership  sold
     its remaining 10.0242% interest in the Eckerd drug store  in
     Utica,  New York, in two separate transactions, to unrelated
     third  parties.   The Partnership received  total  net  sale
     proceeds  of  $509,303, which resulted  in  a  net  gain  of
     $59,412.   The cost and related accumulated depreciation  of
     the interests sold was $463,144 and $13,253, respectively.

     On  April  12,  2007, the Partnership sold 12.1042%  of  the
     KinderCare  daycare  center  in Kimberly,  Wisconsin  to  an
     unrelated  third party.  The Partnership received  net  sale
     proceeds  of  $236,188, which resulted  in  a  net  gain  of
     $92,257.   The cost and related accumulated depreciation  of
     the interest sold was $164,404 and $20,473, respectively.

     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.   At  December  31,  2007,  the
     property was classified as Real Estate Held for Sale with  a
     book value of $159,557.

     On  August  30,  2007,  the  Partnership  sold  the  Champps
     Americana  restaurant in San Antonio, Texas to  the  tenant.
     The  Partnership received net sale proceeds  of  $3,143,523,
     which resulted in a net gain of $1,018,624.  At the time  of
     sale,  the  cost  and related accumulated  depreciation  was
     $2,833,357 and $708,458, respectively.


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

(6)  Discontinued Operations - (Continued)

     In  March 2008, the Partnership entered into an agreement to
     sell  the Johnny Carino's restaurant in Laredo, Texas to  an
     unrelated third party.  The sale is subject to contingencies
     and  may  not  be completed.  If the sale is completed,  the
     Partnership expects to receive net proceeds of approximately
     $2,880,000, which will result in a net gain of approximately
     $520,400.   If  the sale is not completed,  the  Partnership
     will likely seek another buyer for the property and may  not
     be  able  to  negotiate  a purchase agreement  with  similar
     economic  terms.   At  March  31,  2008,  the  property  was
     classified as Real Estate Held for Sale with a book value of
     $2,359,552.

     During  the  first  three  months  of  2008  and  2007,  the
     Partnership  distributed net sale proceeds  of  $95,960  and
     $42,482 to the Limited and General Partners as part of their
     quarterly  distributions,  which  represented  a  return  of
     capital  of  $4.17  and $1.84 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:

                                                2008         2007

     Rental Income                          $  56,262   $ 159,201
     Property Management Expenses                   0      (1,216)
     Depreciation                             (14,443)    (30,757)
     Gain on Disposal of Real Estate           99,192      59,412
                                             ---------   ---------
       Income from Discontinued Operations  $ 141,011   $ 186,640
                                             =========   =========

(7)  Recently Issued Accounting Pronouncements -

     In  December 2007, the Financial Accounting Standards  Board
     issued  Statement  of  Financial  Accounting  Standards  No.
     141(R)  ("SFAS 141(R)"), Business Combinations.  SFAS 141(R)
     requires,  among other things, the expensing of acquisition-
     related transaction costs.  Management anticipates that SFAS
     141(R) will be effective for property acquisitions completed
     on  or after January 1, 2009.  Management is evaluating  the
     effect  that  the adoption of SFAS 141(R) will have  on  the
     Partnership's results of operations, financial position, and
     the related disclosures.

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

        The Management's Discussion and Analysis contains various
"forward  looking  statements"  within  the  meaning  of  federal
securities  laws  which  represent management's  expectations  or
beliefs  concerning future events, including statements regarding
anticipated  application of cash, expected  returns  from  rental
income,  growth  in  revenue, the sufficiency  of  cash  to  meet
operating  expenses, rates of distribution,  and  other  matters.
These,   and  other  forward  looking  statements  made  by   the
Partnership,  must be evaluated in the context  of  a  number  of
factors that may affect the Partnership's financial condition and
results of operations, including the following:

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

    the  federal  income tax consequences of rental  income,
    deductions,  gain  on  sales and other  items  and  the
    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.

The 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.

        The Partnership purchases properties and records them  in
the   financial   statements  at  cost   (including   capitalized
acquisition  expenses).   The Partnership  anticipates  that  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.

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

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

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

Results of Operations

        For  the three months ended March 31, 2008 and 2007,  the
Partnership  recognized rental income from continuing  operations
of  $307,004 and $256,253, respectively.  In 2008, rental  income
increased  due  to  additional rent received  from  one  property
acquisition in 2008 and rent increases on three properties.

        For  the three months ended March 31, 2008 and 2007,  the
Partnership  incurred  Partnership administration  expenses  from
affiliated  parties of $55,758 and $53,616, respectively.   These
administration  expenses  include  costs  associated   with   the
management of the properties, processing distributions, reporting
requirements and correspondence to the Limited Partners.   During
the   same   periods,   the  Partnership   incurred   Partnership
administration  and property management expenses  from  unrelated
parties  of  $11,329 and $12,462, 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, 2008 and 2007,  the
Partnership  recognized interest income of $20,991  and  $18,443,
respectively.  In 2008, interest income increased mainly  due  to
the  Partnership  having more money invested in  a  money  market
account due to property sales.

        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,  2008, the Partnership recognized  income  from
discontinued  operations of $141,011, representing rental  income
less  depreciation of $41,819 and gain on disposal of real estate
of  $99,192.   For  the three months ended March  31,  2007,  the
Partnership  recognized  income from discontinued  operations  of
$186,640,  representing  rental income less  property  management
expenses  and  depreciation of $127,228 and gain on  disposal  of
real estate of $59,412.

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

        During  the  first three months of 2007, the  Partnership
sold its remaining 10.0242% interest in the Eckerd drug store  in
Utica, New York, in two separate transactions, to unrelated third
parties.   The  Partnership received total net sale  proceeds  of
$509,303, which resulted in a net gain of $59,412.  The cost  and
related  accumulated  depreciation  of  the  interests  sold  was
$463,144 and $13,253, respectively.

        On  April 12, 2007, the Partnership sold 12.1042% of  the
KinderCare daycare center in Kimberly, Wisconsin to an  unrelated
third  party.   The  Partnership received net  sale  proceeds  of
$236,188, which resulted in a net gain of $92,257.  The cost  and
related  accumulated  depreciation  of  the  interest  sold   was
$164,404 and $20,473, respectively.

        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.    At
December  31,  2007, the property was classified as  Real  Estate
Held for Sale with a book value of $159,557.

        On  August  30,  2007, the Partnership sold  the  Champps
Americana  restaurant in San Antonio, Texas to the  tenant.   The
Partnership  received  net  sale proceeds  of  $3,143,523,  which
resulted  in a net gain of $1,018,624.  At the time of sale,  the
cost  and  related  accumulated depreciation was  $2,833,357  and
$708,458, 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.  The sale is subject to contingencies  and
may  not be completed.  If the sale is completed, the Partnership
expects  to  receive  net  proceeds of approximately  $2,880,000,
which  will  result in a net gain of approximately $520,400.   If
the  sale  is  not  completed, the Partnership will  likely  seek
another buyer for the property and may not be able to negotiate a
purchase  agreement with similar economic terms.   At  March  31,
2008,  the property was classified as Real Estate Held  for  Sale
with a book value of $2,359,552.

        Inflation  has  had  a  minimal  effect  on  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.   In addition, leases may contain  rent  clauses
which  entitle  the  Partnership to receive  additional  rent  in
future  years  if gross receipts for the property exceed  certain
specified  amounts.  Increases in sales volumes of  the  tenants,
due to inflation and real sales growth, may 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.

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

Liquidity and Capital Resources

        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  was  partially offset by cash generated from the  sale  of
property.   During  the three months ended March  31,  2007,  the
Partnership's  cash balances increased $306,606 as  a  result  of
cash  generated  from the sale of property, which  was  partially
offset  by distributions paid to the Partners in excess  of  cash
generated from operating activities.

        Net  cash provided by operating activities decreased from
$324,573 in 2007 to $320,614 in 2008 as a result of a decrease in
total  rental  and interest income in 2008, which  was  partially
offset  by  net timing differences in the collection of  payments
from  the  tenants and the payment of expenses and a decrease  in
Partnership  administration and property management  expenses  in
2008.

        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 and 2007, the Partnership generated cash flow from
the  sale  of real estate of $258,749 and $509,303, respectively.
During  the  three months ended March 31, 2008,  the  Partnership
expended  $3,626,652 to invest in real properties  (inclusive  of
acquisition   expenses)  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
$3,626,652.   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.  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.

        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 ten days 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, 2008 and 2007,  the
Partnership  declared  distributions of  $413,128  and  $409,087,
respectively, which were distributed 99% to the Limited  Partners
and  1%  to the General Partners.  The Limited Partners  received
distributions  of $408,996 and $404,996 and the General  Partners
received  distributions  of $4,132 and $4,091  for  the  periods,
respectively.

        During  the  first  three months of 2008  and  2007,  the
Partnership distributed net sale proceeds of $95,960 and  $42,482
to  the  Limited and General Partners as part of their  quarterly
distributions, which represented a return of capital of $4.17 and
$1.84   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  2007, two Limited Partners redeemed  a  total  of
23.34  Partnership  Units  for  $9,445  in  accordance  with  the
Partnership  Agreement.   The Partnership  acquired  these  Units
using Net Cash Flow from operations.  In prior years, a total  of
58  Limited  Partners  redeemed 1,197.55  Partnership  Units  for
$949,024.    The  redemptions  increase  the  remaining   Limited
Partners' ownership interest in the Partnership.  As a result  of
these   redemption  payments  and  pursuant  to  the  Partnership
Agreement, the General Partners received distributions of $96  in
2007.

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

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

       Not applicable.

ITEM 4T. 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 applicable.

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.
                   PART II - OTHER INFORMATION
                           (Continued)

ITEM 6.EXHIBITS.

    10.1  Purchase  Agreement dated March  3,  2008  between  the
    Partnership  and Healthfirst Real Estate III LP  relating  to
    the Property at 7603 San Dario Avenue, Laredo, Texas.

    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 9, 2008           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)