SECURITIES AND EXCHANGE COMMISSION
                           Washington,  D. C.  20549

                                 Form 10-Q

     (Mark One)
          X       QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
         ---      SECURITIES EXCHANGE ACT OF 1934

        For the Quarterly Period Ended December 31, 1999

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

        For the transition period from __________ to __________


                        Commission File Number 0-5214

                              PEERLESS MFG. CO.
  -----------------------------------------------------------------------
           (Exact name of registrant as specified in its charter)


            Texas                                     75-0724417
  ----------------------------------------------------------------------
  (State or other jurisdiction of                  (I.R.S. Employer
  incorporation or organization)                  identification No.)


   2819 Walnut Hill Lane       Dallas, Texas             75229
     P. O. Box 540667          Dallas, Texas             75354
   (Address of principal executive offices)            (Zip code)


   Registrant's telephone number, including area code   (214) 357-6181


                                  None
  -----------------------------------------------------------------------
  Former name, former address and former fiscal year, if changed
  since last report.

  Indicate  by  a 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 shorter
  periods  that the registrant was  required to file such reports),  and
  (2) has been subject to such filing requirements for the past 90 days.

                        Yes    X        No
                              ---            ---

  Indicate the number of shares outstanding of each of the issuer's
  classes of common stock, as of the latest practicable date.

             Class                      Outstanding at February 14, 2000
  -----------------------------         --------------------------------
  Common stock, $1.00 par value                 1,462,492 Shares

<PAGE>
                             PEERLESS MFG. CO.

                                  INDEX

                                                                      Page
                                                                     Number
                                                                     ------
Part I: Financial Information

        Item 1: Consolidated Financial Statements

           Condensed Consolidated Balance Sheets for the
           periods ended December 31, 1999 and June 30, 1999.          3

           Condensed Consolidated Statements of Earnings for the
           three and six months ended December 31, 1999 and 1998.      4

           Condensed Consolidated Statements of Cash Flows for
           the six months ended December 31, 1999 and 1998.            5

           Notes to the Condensed Consolidated Financial Statements. 6 - 7

        Item 2: Management's Discussion and Analysis of Financial
            Condition and Results of Operations.                     8 - 11


Part II:  Other Information

          Legal Proceedings                                            12

          Exhibits and Reports                                      12 - 13

          Signatures                                                   14



                                  2 of 14
<PAGE>
<TABLE>
                                  PART  I
                           FINANCIAL INFORMATION
Item 1. Financial Statements

                             PEERLESS MFG. CO.
                    CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
                                                December 31,      June 30,
                                                    1999            1999
                                                ----------      ----------
<S>                                            <C>            <C>
Assets:                                         (UNAUDITED)       (AUDITED)
Current assets:
   Cash and cash equivalents                   $ 2,528,940     $   210,866
   Short term investments                          273,343         273,343
   Accounts receivable-principally trade-net
    of allowance for doubtful accounts of
    $719,102 at December 31, 1999 and
    $685,330 at June 30, 1999                   10,399,558      12,195,037
   Inventories:
      Raw materials                              1,072,876         961,450
      Work in process                              513,963       2,522,182
      Finished goods                               558,139         247,338
   Costs and earnings in excess of billings
    on uncompleted contracts                     4,569,604       3,268,181
   Other                                         1,292,320         777,635
                                                ----------      ----------
      Total current assets                      21,208,743      20,456,032

Property, plant and equipment-at Cost,
 less accumulated depreciation                   2,087,582       2,102,546
Property held for investment-at Cost,
 less accumulated depreciation                      68,900          68,900
Deferred income taxes                               59,613          59,613
Other assets                                       689,252         791,681
                                                ----------      ----------
                                               $24,114,090     $23,478,772
                                                ==========      ==========
<PAGE>
Liabilities and Stockholders' Equity:
Current liabilities:
   Accounts payable-trade                        5,127,302       5,626,058
   Billings in excess of costs and
    earnings on uncompleted contracts            1,844,378         572,970
   Commissions payable                           1,189,459       1,204,584
   Accrued liabilities:
      Compensation                                 523,773       1,188,165
      Warranty                                     254,852         313,773
      Deferred income taxes                         42,736          42,736
      Other                                        254,205          38,669
                                                ----------      ----------
      Total current liabilities                  9,236,705       8,986,955

Stockholders' equity:
   Common stock-authorized 10,000,000 shares
    of $1 par value; issued and outstanding,
    1,459,992 and 1,452,492 shares at December
    31, 1999 and June 30, 1999, respectively     1,459,992       1,452,492
   Additional paid-in capital                    2,610,658       2,539,951
   Unamortized value of restricted stock grants    (42,486)         (4,719)
   Cumulative foreign currency
    translation adjustment                        (120,741)       (103,824)
   Retained earnings                            10,969,962      10,607,917
                                                ----------      ----------
                                                14,877,385      14,491,817
                                                ----------      ----------
                                               $24,114,090     $23,478,772
                                                ==========      ==========

The accompanying notes are an integral part of these statements.

                                  3 of 14
</TABLE>
<PAGE>
<TABLE>
                             PEERLESS MFG. CO.
                      CONDENSED STATEMENTS OF EARNINGS
                               (UNAUDITED)


                              Three Months Ended         Six Months Ended
                                  December 31,             December 31,
                              1999         1998          1999         1998
                           ----------   ----------    ----------   ----------
<S>                       <C>          <C>           <C>          <C>
Revenues                  $10,358,296  $10,931,835   $22,665,368  $20,301,525
Cost of goods sold          6,457,827    7,295,692    15,170,512   13,722,263
                           ----------   ----------    ----------   ----------
      Gross profit          3,900,469    3,636,143     7,494,856    6,579,262

Operating expenses          3,186,881    2,729,934     6,387,992    5,321,089
                           ----------   ----------    ----------   ----------
      Operating income        713,588      906,209     1,106,864    1,258,173

Other income(expense)
   Interest income              1,612       16,679         3,189       23,673
   Interest expense           (11,546)        (954)      (20,486)     (18,898)
   Foreign exchange
    gains(losses)             (13,590)     (65,851)       63,886      (93,355)
   Other, net                  (8,597)     (10,620)      (26,470)     (12,805)
                           ----------   ----------    ----------   ----------
                              (32,121)     (60,746)       20,119     (101,385)
                           ----------   ----------    ----------   ----------
Earnings from operations
 before Federal income tax    681,467      845,463     1,126,983    1,156,788

Federal income tax
   Current                    242,387      331,608       402,055      436,312
   Deferred                         -        2,037          (741)       8,905
                           ----------   ----------    ----------   ----------
                              242,387      333,645       401,314      445,217
                           ----------   ----------    ----------   ----------
Net earnings                  439,080      511,818       725,669      711,571
                           ==========   ==========    ==========   ==========
Basic and diluted
 earnings per share             $0.30        $0.35         $0.50        $0.49
                           ==========   ==========    ==========   ==========
Basic weighted average
 shares                     1,457,747    1,457,492     1,455,272    1,457,492
Dilutive options                4,741        6,369         6,359        7,995
                           ----------   ----------    ----------   ----------
Adjusted weighted average
 shares                     1,462,488    1,463,861     1,461,631    1,465,487
                           ==========   ==========    ==========   ==========
Cash dividend per
 common share                  $0.125       $0.125        $0.250       $0.250
                           ==========   ==========    ==========   ==========

The accompanying notes are an integral part of these statements.

                                  4 of 14
</TABLE>
<PAGE>
<TABLE>
                               PEERLESS MFG. CO.
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (UNAUDITED)
                                                    For the six months ended
                                                           December 31,
                                                        1999         1998
                                                     ---------     ---------
<S>                                                 <C>           <C>
Cash flows from operating activities:
  Net earnings                                      $  725,669    $  711,564
  Adjustments to reconcile earnings to net cash
     provided by (used in) operating activities:
       Depreciation and amortization                   206,596       172,953
       Other                                             3,096           698
       Changes in operating assets and liabilities
           Accounts receivable                       1,795,479     4,205,518
           Inventories                               1,585,992        78,338
           Cost and earnings in excess of billings
             on uncompleted contracts               (1,301,423)      (75,221)
           Other current assets                       (514,685)      (20,034)
           Other assets                                102,429       (45,582)
           Accounts payable                           (498,702)   (2,468,612)
           Billings in excess of costs and
             earnings on uncompleted contracts       1,271,408       288,420
           Commissions payable                         (15,125)     (209,617)
           Accrued liabilities                        (507,777)     (743,193)
                                                     ---------     ---------
                                                     2,127,288     1,183,668
                                                     ---------     ---------
           Net cash provided by (used in)
             operating activities                    2,852,957     1,895,232

Cash flows from investing activities:
   Net sales (purchases) of property and equipment    (191,632)     (115,364)
                                                     ---------     ---------
           Net cash provided by (used in)
             investing activities                     (191,632)     (115,364)

Cash flows from financing activities:
   Net change in short-term borrowings                       -      (200,000)
   Sales of common stock                                37,344             -
   Dividends paid                                     (363,624)     (364,374)
                                                     ---------     ---------
           Net cash provided by (used in)
             financing activities                     (326,280)     (564,374)
Effect of exchange rate on cash and cash equivalents   (16,971)       18,786
                                                     ---------     ---------
           Net increase (decrease) in cash
             and cash equivalents                    2,318,074     1,234,280
Cash and cash equivalents at beginning of period       210,866       428,482
                                                     ---------     ---------
Cash and cash equivalents at end period             $2,528,940    $1,662,762
                                                     =========     =========

The accompanying notes are an integral part of these statements.

                                  5 of 14
</TABLE>
<PAGE>

                          PEERLESS MFG. CO.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


  1.   The accompanying  consolidated  financial statements  of  Peerless
       Mfg. Co. and its subsidiaries  (the "Company") have been  prepared
       without audit.  In our  opinion, the financial statements  reflect
       all  adjustments  necessary  to  present  fairly  the  results  of
       operations for the three and six  months ending December 31,  1999
       and 1998, the Company's financial  position at December 31,  1999,
       and June  30, 1999,  and  cash flows  for  the six  months  ending
       December 31, 1999 and 1998.  These adjustments are of a normal and
       recurring  nature,  which  are  in  the  opinion  of   management,
       necessary for a  fair presentation of  the financial position  and
       results of operations for the interim periods.

       Certain notes and other information have been condensed or omitted
       from the interim financial statements presented in this  Quarterly
       Report on Form 10-Q.  Therefore, these financial statements should
       be read  in  conjunction with  our  Annual Report  Form  10-K,  as
       amended,  for  the  Fiscal  year  ended  June  30,  1999  and  the
       consolidated financial statements and  notes included in our  June
       30, 1999, audited financial statements.

  2.   The results for interim periods are not necessarily indicative  of
       the results to be  expected for the full  year.

                                  6 of 14

  3.   We have  formal agreements  with Bank  of America  N.A.,  formerly
       NationsBank N.A., and Chase Bank of Texas N.A. for $3,500,000 each
       for  an  aggregate  of  $7,000,000  continuing  lines  of  credit,
       renewable annually.   Under the terms  of these agreements,  loans
       bear interest at the prevailing prime rate and we are required  to
       pay 1/4 of 1% per annum on the unused portion of the facility.  In
       addition, Chase Bank of Texas provides us a LIBOR rate option.  As
       of December 31, 1999,  we had no  loans outstanding against  these
       lines  of  credit.   The  Company had  $600,000 outstanding  as of
       September 30, 1999.

  4.   We  consolidate   the  accounts   of  our   wholly-owned   foreign
       subsidiaries,  Peerless  Europe  Limited and Peerless  Europe B.V.
       All significant intercompany accounts  and transactions have  been
       eliminated in the consolidation.
<PAGE>
  5.   We identify reportable segments based on management responsibility
       within our corporate structure.   We have two reportable  industry
       segments which are set out below:
<TABLE>
                 Gas/Liquid   Selective   Unallocated  Consolidated
                 Filtration   Catalytic    Corporate
                              Reduction    Expenses
                              Systems
                 ---------    ---------    ---------    -----------
  <S>           <C>          <C>          <C>          <C>
  Three months
  ending
  12/31/99
  ------------
  Revenues      $ 6,784,000  $3,574,000       -        $ 10,358,000
  from
  Customers

  Segment       $ 1,110,000  $  686,000  ($1,082,000)  $    714,000
  profit(loss)


  Three months
  ending
  12/31/98
  ------------
  Revenues      $ 9,333,000  $1,599,000       -        $ 10,932,000
  from
  Customers

  Segment       $ 1,259,000  $  325,000  ($  678,000)  $    906,000
  profit(loss)


  Six months
  ending
  12/31/99
  ------------
  Revenues      $16,199,000  $6,466,000       -        $ 22,665,000
  from
  Customers

  Segment       $ 2,001,000  $1,328,000  ($2,233,000)  $  1,096,000
  profit(loss)


  Six months
  ending
  12/31/98
  ------------
  Revenues      $18,318,000  $1,984,000       -        $ 20,302,000
  from
  Customers

  Segment       $ 2,532,000  $  272,000  ($1,546,000)  $  1,258,000
  profit(loss)
</TABLE>
                                  7 of 14
<PAGE>

  Item 2.   Management's discussion and analysis of financial condition
            and results of operations.

  This report  contains  certain forward-looking  statements  within  the
  meaning of Section 27A of the Securities Act of 1933 and Section 21E of
  the Securities Exchange Act  of 1934.  Such  statements are subject  to
  inherent risks and uncertainties, some of which cannot be predicted  or
  quantified.    Actual  results  could  differ  materially  from   those
  projected in the forward-looking statements as  a result of changes  in
  market conditions, increased competition, global and domestic  economic
  conditions, or other  factors.  The  following discussion and  analysis
  should be read in conjunction with the attached consolidated  financial
  statements and notes thereto, and with the Company's audited  financial
  statements and notes thereto for the fiscal year ended June 30, 1999.


  Capital Resources and Liquidity

  As a  general policy,  corporate liquidity  is  maintained at  a  level
  adequate to support  existing operations and  planned internal  growth,
  and to  allow continued  operations  through periods  of  unanticipated
  adversity.

  Cash and equivalents increased $2,318,000 from June 30, 1999.   Company
  operations provided $2,853,000 primarily from net earnings of $726,000,
  reductions in  Account  Receivable  of $1,795,000  and  inventories  of
  $1,586,000, combined  with increased  billings in  excess of  costs  of
  $1,271,000.   These positive  cash flows  were offset  by increases  in
  costs in  excess of  billings by  $1,301,000, increased  other  current
  assets of $515,000, reductions in accounts payable of $499,000, accrued
  liabilities of $508,000, and dividends paid of $364,000.

  We  continue   to  finance   plant  expansion,   equipment   purchases,
  acquisitions and  working capital  requirements primarily  through  the
  retention of earnings, which is reflected  by the absence of  long-term
  debt in our balance sheet.   In addition to retained earnings, we  have
  from time  to  time used  two  short-term bank  credit  lines  totaling
  $7,000,000 to  supplement  working  capital.    We  currently  have  no
  material commitments for capital  expenditures other than with  respect
  to our established plant and equipment maintenance program.


                                  8 of 14
<PAGE>
  REVENUE:  Revenue decreased  5% from $10,932,000  for the three  months
  ended December  31, 1998  to $10,358,000  for  the three  months  ended
  December 31, 1999. The decrease in revenues was primarily due to  lower
  revenues from  the traditional  products of  filtration and  separation
  systems, which was partially offset by improved sales for SCR products.
  For the six month period,  revenues increased 12% from $20,302,000  for
  the six  months ended  December 31,  1998 to  $22,665,000 for  the  six
  months ended December 31, 1999. The  year to date sales improvement  is
  due to strong sales of SCR products.

  The backlog of uncompleted orders and letters of intent at December 31,
  1999 was approximately $38,700,000 as compared  to a December 31,  1998
  backlog of approximately $25,000,000.   Of the  $38,700,000 backlog  at
  December 31, 1999, approximately 80% is scheduled to  be  completed  in
  the current fiscal year.

  GROSS PROFIT:  Gross profit increased 7% from $3,636,000 for the  three
  months ended December 31,1998 to $3,900,000 for the three months  ended
  December 31, 1999.  For the six month period ending December 31,  1999,
  gross profit increased 14%  to $7,495,000 from  $6,579,000 for the  six
  months ending  December  31,  1998.   The  increased  gross  profit  is
  primarily attributable  to the  increased revenue  from  environmental,
  nuclear, and marine products.

  OPERATING EXPENSES:  Operating  expenses increased 17% from  $2,730,000
  for the three  months ended  December 31,  1998 to  $3,187,000 for  the
  three months ended  December 31,1999.   For the  six months,  operating
  expenses increased  20%  from  $5,321,000 for  the  six  months  ending
  December 31,  1998 compared  to $6,388,000  for the  six months  ending
  December 31,  1999.  Higher operating  expenses  are due  to  increased
  volume of orders, increased implementation cost for  an ERP System  and
  higher warranty expense for the period.


  OTHER  INCOME/(EXPENSE):     We   recognized  net   other  expense   of
  approximately $32,000  for the  three months  ended December  31,  1999
  compared to net other expenses of  approximately $61,000 for the  three
  months ended  December 31,  1998.   This is  primarily due  to  foreign
  exchange losses  declining from  $66,000 for  the three  months  ending
  December 31, 1998 to  $14,000 for the three  months ended December  31,
  1999.

                                  9 of 14
<PAGE>

  YEAR 2000 COMPLIANCE:

  The year 2000 problem is the result of computer programs being  written
  using two digits rather than four digits to define the applicable year.
  Miscalculations or  system failures  could result  from the  year  2000
  problem. Based on our review of our business since January 1, 2000,  we
  have not experienced  any material effects  of the  year 2000  problem.
  Although we have  not been informed  of any  material risks  associated
  with the  year  2000  problem  from third  parties,  there  can  be  no
  assurance that  they may  not impact  our business  in the  future.  We
  regularly monitor our  business applications and  communicate with  key
  business relations so  that we expect  we will be  able to resolve  any
  year 2000 problems that may arise in the future. Our current assessment
  of risks related  to the year  2000 problem is  that there  will be  no
  significant adverse impact on our operations or financial performance.


  INTERNATIONAL MARKETS:

  Demand for the Company's  products in Southeast Asia  remain slow as  a
  result of  the current  financial situation  there.   However,  we  are
  experiencing an increase  in orders of  our company's products  through
  our UK subsidiary, Peerless Europe Ltd.


  SCR Products:

  Orders for the purchase of  SCR environmental protection products  have
  increased as  evidenced by  an order  in the  amount of  $11.9  million
  placed in December.   New SCR opportunities are  the result of the  new
  gas turbine powered electric generating facilities being built to  fill
  demand for electric  power in the  U.S.  These  projects require  clean
  burning gas which in turn creates the opportunity to sell the Company's
  gas cleaning  equipment.   Coal fired  electric power  plants are  also
  adding SCR products  to comply with  US Government  mandated lower  NOx
  emission levels.

                                 10 of 14
<PAGE>

                          PEERLESS MFG. CO.

                               PART II

                          OTHER INFORMATION

  Item 1 -- Legal proceedings

       Reference is made to Form 10-K Annual Report, as amended, Item  3,
       Page 5, "Legal  Proceedings" for the  Fiscal year  ended June  30,
       1999.  For the  six months ended December  31, 1999 there were  no
       material  developments  or  new  proceedings  filed  against   the
       Company.


  Item 6 -- Exhibits and Reports -- Form 8-K

  (a)       EXHIBITS:

            References to the Company's SEC File Number 0-05214.

  3(a)      Articles of  Incorporation,  as  amended to  date  (filed  as
            Exhibit 3(a)  to our  Quarterly Report  on Form  10-Q,  dated
            December 31, 1997, and incorporated herein by reference).

  3(b)      Bylaws, as  amended to  date (filed  as Exhibit  3(b) to  our
            Annual  Report  on  Form  10-K,  dated  June  30,  1997,  and
            incorporated herein by reference).

  10(a)     Incentive Compensation  Plan effective  January 1,  1981,  as
            amended January  23,  1991 (filed  as  Exhibit 10(b)  to  our
            Annual  Report  on  Form  10-K,  dated  June  30,  1991,  and
            incorporated herein by reference).

  10(b)     1985 Restricted Stock Plan  for Peerless Mfg. Co.,  effective
            December 13,  1985  (filed as  Exhibit  10(b) to  our  Annual
            Report on Form  10-K, dated June  30, 1993, and  incorporated
            herein by reference).

  10(c)     1991 Restricted  Stock  Plan for  Non-Employee  Directors  of
            Peerless Mfg. Co.,  adopted subject  to shareholder  approval
            May 24, 1991, and approved by shareholders November 20,  1991
            (filed as Exhibit  10(e) to our  Annual Report  on Form  10-K
            dated June 30, 1991, and incorporated herein by reference).

                                 11 of 14
<PAGE>

  10(d)     Employment Agreement,  dated as  of April  29, 1994,  by  and
            between Peerless  Mfg.  Co.  and  Sherrill  Stone  (filed  as
            Exhibit 10(d)  to our  Annual Report  on  Form 10-K  for  the
            Fiscal year ended June 30,  1994, and incorporated herein  by
            reference).

  10(e)     Agreement, dated as of April 29, 1994 by and between Peerless
            Mfg. Co. and Sherrill  Stone (filed as  Exhibit 10(e) to  our
            Annual  Report  on  Form  10-K   dated  June  30,  1994   and
            incorporated herein by reference).

  10(f)   * Eighth Amended  and  Restated  Loan Agreement,  dated  as  of
            December 12,  1999, between  Bank of  America N.A.,  formerly
            NationsBank of Texas, N.A., and Peerless Mfg. Co.

  10(g)   * Second Amended  and  Restated  Loan Agreement,  dated  as  of
            December 12, 1999, and Waiver  and First Amendment to  Second
            Amended and Restated Loan Agreement dated December 12,  1999,
            by and between Chase Bank of Texas N.A, and Peerless Mfg.

  10(h)     Peerless Mfg.  Co. 1995  Stock  Option and  Restricted  Stock
            Plan, adopted by the Board of Directors December 31, 1995 and
            approved by the Shareholders on  November 21, 1996 (filed  as
            Exhibit 10(h) to our  Annual Report on  Form 10-K dated  June
            30, 1997 and incorporated herein by reference), as amended by
            Amendment #1  dated November  11, 1999.   (filed  as  exhibit
            10(h) to our Quarterly Report  on Form 10-Q, dated  September
            30, 1999 and incorporated herein by reference).

  10(i)     Rights Agreement between  Peerless Mfg.  Co. and  ChaseMellon
            Shareholder  Services,  L.L.C.,  adopted  by  the  Board   of
            Directors  May  21,   1997  (filed  as   Exhibit  1  to   our
            Registration Statement  on  Form 8-A(File  No.  0-05214)  and
            incorporated herein by reference).

  10(j)     Employment Agreement dated as of July 23, 1999 by and between
            Peerless Mfg. Co. and G.D.  Cornwell (filed as exhibit  10(j)
            to our Quarterly  Report on  Form 10-Q,  dated September  30,
            1999 and incorporated herein by reference).

  10(k)     Agreement dated as of July 23,  1999 by and between  Peerless
            Mfg. Co. and  G.D. Cornwell (filed  as exhibit  10(k) to  our
            Quarterly Report on Form 10-Q,  dated September 30, 1999  and
            incorporated herein by reference).


                                 12 of 14
<PAGE>

  21        Our Subsidiaries (filed as Exhibit  21 too our Annual  Report
            on Form  10-K  dated  September 30,  1999,  and  incorporated
            herein by reference).

  27        Financial Data Schedule.*

  *Filed herewith

  (b)       Reports on Form 8-K.  None.


                                 13 of 14

<PAGE>
                                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 thereto duly authorized.

                                     PEERLESS MFG. CO.



  Dated: February 14, 2000



   /s/ Sherrill Stone                /s/  Thomas J. Reeve
  ____________________________       ___________________________
  By:  Sherrill Stone                By:  Thomas J. Reeve
       Chairman, President and            Chief Financial Officer
       Chief Executive Officer



                                 14 of 14