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 September 30, 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 November 12, 1999
  Common stock, $1.00 par value              1,456,492 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 September 30, 1999 and June 30, 1999.         3

             Condensed Consolidated Statements of Earnings for
             for the three months ended September 30, 1999 and 1998.     4

             Condensed Consolidated Statements of Cash Flows for
             the three months ended September 30, 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>
				PART  I
                          FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
			     PEERLESS MFG. CO.
		CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
                                               September 30,      June 30,
                                                   1999             1999
                                                ----------      ----------
<S>                                            <C>             <C>
Assets:                                         (UNAUDITED)       (AUDITED)
Current assets:
   Cash and cash equivalents                   $   429,551     $   210,866
   Short term investments                          273,343         273,343
   Accounts receivable-principally trade-net
      of allowance for doubtful accounts of
      $714,387 at September 30, 1999 and
      $685,330 at June 30, 1999                 13,145,145      12,195,037
   Inventories:
      Raw materials                                769,975         961,450
      Work in process                            1,441,236       2,522,182
      Finished goods                               734,635         247,338
   Costs and earnings in excess of billings
      on uncompleted contracts                   3,596,932       3,268,181
   Other                                         1,663,645         777,635
                                                ----------      ----------
      Total current assets                      22,054,462      20,456,032

Property, plant and equipment-at Cost,
  less accumulated depreciation                  2,028,285       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                                       868,548         791,681
                                                ----------      ----------
                                               $25,079,808     $23,478,772
                                                ==========      ==========
<PAGE>
Liabilities and Stockholders' Equity:
Current liabilities:
   Notes payable                               $   600,000     $         0
   Accounts payable-trade                        6,673,422       5,626,058
   Billings in excess of costs and
      earnings on uncompleted contracts            508,263         572,970
   Commissions payable                           1,428,801       1,204,584
   Accrued liabilities:
      Compensation                                 814,508       1,188,165
      Warranty                                     190,808         313,773
      Deferred income taxes                         42,736          42,736
      Other                                        381,044          38,669
                                                ----------      ----------
      Total current liabilities                 10,639,582       8,986,955

Stockholders' equity:
   Common stock-authorized 10,000,000 shares
      of $1 par value; issued and outstanding,
      1,456,492 shares at September 30, 1999
      and 1,452,492 shares at June 30, 1999      1,456,492       1,452,492
   Additional paid-in capital                    2,573,295       2,539,951
   Unamortized value of restricted stock grants     (3,171)         (4,719)
   Accumulated other comprehensive income(loss)   (117,272)       (103,824)
   Retained earnings                            10,530,882      10,607,917
                                                ----------      ----------
                                                14,440,226      14,491,817
                                                ----------      ----------
                                               $25,079,808     $23,478,772
                                                ==========      ==========

The accompanying notes are an integral part of these statements.
</TABLE>
                               3 of 14
<PAGE>
<TABLE>
                          PEERLESS MFG. CO.
                   CONDENSED STATEMENTS OF EARNINGS
                             (UNAUDITED)


                                           Three Months Ended
                                              September 30,
                                       ---------------------------
                                          1999             1998
                                       ----------        ---------
<S>                                   <C>               <C>
Revenues                              $12,307,071       $9,369,690
Cost of goods sold                      8,664,242        6,426,571
                                       ----------        ---------
      Gross profit                      3,642,829        2,943,119

Operating expenses                      3,260,580        2,591,155
                                       ----------        ---------
      Operating income                    382,249          351,964

Other income(expense)
   Interest income                          1,577            6,994
   Interest expense                        (8,940)         (17,944)
   Foreign exchange gains(losses)          77,475          (27,504)
   Other, net                              (6,845)          (2,185)
                                       ----------        ---------
                                           63,267          (40,639)
                                       ----------        ---------
Earnings from operations
   before Federal income tax              445,516          311,325

Federal income tax
   Current                                159,668          104,704
   Deferred                                  (741)           6,868
                                       ----------        ---------
                                          158,927          111,572
                                       ----------        ---------
Net earnings                              286,589          199,753
                                       ==========        =========
Basic and diluted earnings per share        $0.20            $0.14

Basic weighted average shares           1,452,796        1,457,492
Dilutive options                            8,689            2,981
                                       ----------        ---------
Adjusted weighted average shares        1,461,485        1,460,473
                                       ==========        =========
Cash dividend per common share             $0.125           $0.125
                                       ==========        =========

The accompanying notes are an integral part of these statements.
</TABLE>
                               4 of 14
<PAGE>
<TABLE>
                            PEERLESS MFG. CO.
             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (UNAUDITED)

                                                     For the three months ended
                                                            September 30,
                                                         1999          1998
                                                      ---------     ---------
<S>                                                  <C>           <C>
Cash flows from operating activities:
  Net earnings                                       $  286,589    $  199,753
  Adjustments to reconcile earnings to net cash
     provided by (used in) operating activities:
         Depreciation and amortization                   99,460        94,707
         Other                                            1,548        (5,281)
         Changes in operating assets and liabilities
           Accounts receivable                         (950,108)    3,861,477
           Inventories                                  785,124        40,909
	   Cost and earnings in excess of billings
                 on uncompleted contracts              (328,751)     (177,316)
           Other current assets                        (886,010)        5,051
           Other assets                                 (84,074)      (87,979)
           Accounts payable                           1,047,364    (2,227,528)
	   Billings in excess of costs and earnings
                 on uncompleted contracts               (64,707)      101,254
           Commissions payable                          224,217      (106,476)
           Accrued liabilities                         (336,309)     (807,431)
                                                      ---------     ---------
                                                       (492,246)      691,387
                                                      ---------     ---------
 Net cash provided by (used in) operating activities   (205,657)      891,140

Cash flows from investing activities:
   Net purchases of property and equipment              (18,683)      (22,619)

Cash flows from financing activities:
   Net change in short-term borrowings                  600,000      (200,000)
   Sales of common stock                                 37,344             0
   Dividends paid                                      (181,562)     (182,187)
                                                      ---------     ---------
 Net cash provided by (used in) financing activities    455,782      (382,187)
Effect of exchange rate on cash and cash equivalents    (12,757)       27,639
                                                      ---------     ---------
 Net increase in cash and cash equivalents              218,685       513,973
Cash and cash equivalents at beginning of period        210,866       428,482
                                                      ---------     ---------
Cash and cash equivalents at end period              $  429,551    $  942,455
                                                      =========     =========

The accompanying notes are an integral part of these statements.
</TABLE>
                               5 of 14
<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 months ended September 30, 1999 and 1998,
       the Company's financial position at  September 30, 1999, and  June
       30, 1999, and cash flows for the three months ended September  30,
       1999 and  1998.   These adjustments  are  of a  normal,  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.  Peerless Mfg.  Co.
       designs and manufactures  custom contracted  pressure vessels  and
       other products  to customer  specifications,  sales of  which  are
       obtained by competitive bids and may result in material sales  and
       profitability  increases  or  decreases  when  comparing   interim
       periods between years.   We generally  recognize sales of  custom-
       contracted  products  at  the  completion  of  the   manufacturing
       process, which is normally less than one year.  The percentage-of-
       completion method is used for long-term contracts.

                               6 of 14
<PAGE>

  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 September 30, 1999, we  had $600,000 outstanding against  these
       lines of credit.  Nothing was outstanding at June 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.


  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     Catalytic     Unallocated    Consolidated
                    Filtration     Reduction     Corporate
                                   Systems       Expenses
                    ----------     ---------     -----------    ------------
  <S>               <C>            <C>           <C>            <C>
  First Quarter
  2000
  -------------
  Revenues from
  Customers         $9,415,000     $2,892,000          -        $12,307,000
  Segment
  profit(loss)        $891,000       $642,000    ($1,151,000)      $382,000


  First Quarter
  1999
  -------------
  Revenues from
  Customers         $8,985,000       $385,000          -         $9,370,000
  Segment
  profit(loss)      $1,273,000       ($53,000)     ($868,000)      $352,000

</TABLE>
                               7 of 14
<PAGE>

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


                          PEERLESS MFG. CO.


  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 $219,000  from  June 30,  1999.    Net
  earnings of $287,000, increases in  short term borrowings of  $600,000,
  increases in accounts payable of $1,047,000 and commissions payable  of
  $224,000, and decreases  in inventory of  $785,000 increased cash  flow
  for the period.  These positive cash flows were offset by increases  in
  accounts receivable of $950,000; increases in other assets of  $970,000
  consisting  primarily  of  advances  to  subcontractors;  decreases  in
  accrued liabilities of $336,000 and dividends paid of $182,000.

  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 increased  31% from $9,370,000  for the three  months
  ended September  30, 1998  to $12,307,000  for the  three months  ended
  September 30, 1999.  The increase  in revenue was attributed  primarily
  to the increased sales of  Catalytic Reduction Systems which  increased
  from $385,000 in the first quarter of Fiscal year 1999 to $2,892,000 in
  the first quarter of Fiscal year 2000.

  The backlog of uncompleted  orders and letters  of intent at  September
  30, 1999 was approximately $25,400,000 as  compared to a September  30,
  1998 backlog of $21,300,000.  Of  the $25,400,000 backlog at  September
  30, 1999, approximately 80% is scheduled to be completed in the current
  fiscal year.

  GROSS PROFIT:  Gross profit increased 24% from $2,943,000 for the three
  months ended September 30,1998 to $3,643,000 for the three months ended
  September  30,  1999.    The   increased  gross  profit  is   primarily
  attributable to  the greater  revenue from  SCR product  sales for  the
  three months ended  September 30,1999.   Gross profit as  a percent  of
  revenue decreased from 31.4% for the first quarter of Fiscal year  1999
  to 29.6% for the first quarter of  Fiscal year 2000.  The gross  profit
  percentage declined  because a  subcontractor for  two major  contracts
  filed bankruptcy and increased our costs to complete the contracts.

  OPERATING EXPENSES:  Operating  expenses increased 26% from  $2,591,000
  for the three  months ended September  30, 1998 to  $3,261,000 for  the
  three months  ended  September  30,1999.   The  increase  in  operating
  expenses  is  due  primarily  to  the  increased  volume  of  contracts
  processed.  Operating expenses decreased as  a percent of revenue  from
  27.6% for the first quarter of Fiscal year 1999 to 26.5% for the  first
  quarter of Fiscal year 2000.

  OTHER  INCOME/(EXPENSE):     We   recognized   net  other   income   of
  approximately $63,000 for  the three  months ended  September 30,  1999
  compared to net other expenses of  approximately $40,000 for the  three
  months  ended  September   30,  1998.     Foreign  exchange  gains   of
  approximately $105,000 were the primary contributor to other income.


                               9 of 14
<PAGE>

  YEAR 2000 COMPLIANCE:

  The inability  of computers,  software  and other  equipment  utilizing
  microprocessors  to  recognize   and  properly   process  data   fields
  containing a two-digit year is commonly  referred to as "the Year  2000
  Compliance issue".  As  the Year 2000 approaches,  such systems may  be
  unable to accurately process certain date-based information.

  As the  case  with  most  other  companies  using  computers  in  their
  operations,  we  are  in  the  process  of  addressing  the  Year  2000
  Compliance issue.  We began converting our information systems  in 1996
  through the purchase of a new  information system that is already  Year
  2000 compliant.  We have  incurred and expended approximately  $150,000
  through September 30,  1999 for remediation  costs associated  with our
  Year 2000 compliance  activities to  date and  we expect  to incur  and
  expense  an  additional  $20,000  in   the  future  to  remediate   our
  information systems  and to  write off  unamortized costs  for  systems
  replaced.  In  addition to these  remediation costs  expended, we  have
  also capitalized approximately $340,000 of capital expenditures through
  September 30,  1999  for the  replacement  and upgrading  of  purchased
  software and hardware  for our existing  systems.  Our  new  system was
  implemented  during  the  quarter  ending  March  31,  1999,  and   was
  successfully tested.   Time  sensitive schedules,  purchase  orders and
  invoices were successfully generated.

  We purchase computer hardware and software products from third  parties
  for incorporation into our products and these third-party products  may
  be affected by the Year 2000 problem.  There can be no guarantee;  that
  these products or the systems of  other companies on which our  systems
  and operations rely  will be timely  converted or that  the failure  of
  these systems would not have an adverse effect on our systems.  We have
  advised our customers inquiring about this issue to contact our vendors
  for Year 2000 information.   We are in  the process of consulting  with
  such vendors in an effort to ascertain whether they have addressed  the
  risk of Year 2000 problems in the systems we currently use.

  We believe that all Year 2000 remediation efforts for our business will
  be completed on time and within budget estimates.  Should any  critical
  service providers, suppliers or customers  be unable to achieve  timely
  compliance, there may  be an  adverse impact  on our  operations.   Our
  current assessment of risks,  based on the  most reasonable worst  case
  scenario, is that there  will be no significant  adverse impact on  our
  operations or financial performance.  We believe that if any disruption
  to operations  does occur,  it will  be isolated  and/or short-term  in
  duration.

                              10 of 14
<PAGE>
  INTERNATIONAL MARKETS:

  Demand for the Company's products in  Southeast Asia has declined as  a
  result of  the  current financial  situation  there.   However,  recent
  economic reports indicate business  activity is improving in  Southeast
  Asia.


  SCR Products:

  Inquiries for  the purchase  of SCR  environmental protection  products
  have increased.  As previously reported, 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.


                              11 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 three months ended September 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).

                              12 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)     Seventh Amended  and Restated  Loan  Agreement, dated  as  of
            December 12,  1998, between  Bank of  America N.A.,  formerly
            NationsBank of Texas, N.A., and  Peerless Mfg. Co. (filed  as
            Exhibit 10(f) to  our Quarterly  Report on  Form 10-Q,  dated
            December 31, 1998 and incorporated herein by reference).

  10(g)     Amended and Restated Loan Agreement, dated as of December 12,
            1998, by and between  Chase Bank of  Texas N.A, and  Peerless
            Mfg. Co. (Filed as Exhibit 10(g)  to our Quarterly Report  on
            Form 10-Q, dated December 21, 1998 and incorporated herein by
            reference).

  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 No. 1 dated November 11, 1999.*

  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.*

  10(k)     Agreement dated as of July 23, 1999  by and between  Peerless
            Mfg. Co. and G.D. Cornwell.*

  21        Our Subsidiaries (filed as Exhibit  21 too our Annual  Report
            on Form 10-K dated June 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: November 12, 1999

  /s/  Sherrill Stone                /s/  Paul W. Willey
  By:  Sherrill Stone                By:  Paul W. Willey
       Chairman, President and            Chief Financial Officer
       Chief Executive Officer

                                     /s/  Kent J. Van Houten
                                     By:  Kent J. Van Houten
                                          Controller
                                          Chief Accounting Officer


                              14 of 14