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                          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 13 week and 39 week periods      Commission File Number 1-4947-1
     ended October 31, 1998

                      J. C. PENNEY FUNDING CORPORATION                   
     _______________________________________________________________________
                (Exact name of registrant as specified in its charter)


                Delaware                                    51-0101524     
     _______________________________________________________________________
         (State or other jurisdiction of               (I.R.S. Employer
          incorporation or organization)                Identification No.)


     6501 Legacy Drive, Plano, Texas                        75024-3698     
     _______________________________________________________________________
     (Address of principal executive offices)               (Zip Code)


     Registrant's telephone number, including area code    972-431-1000 
                                                        __________________

                                   ___________________

     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.

     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.

     500,000 shares of Common Stock of $100 par value, as of October 31, 1998.

     THE REGISTRANT MEETS  THE CONDITIONS SET FORTH IN  GENERAL INSTRUCTION H(1)
     (a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
     DISCLOSURE FORMAT. 

<PAGE>
     PART I - FINANCIAL INFORMATION

     Item 1 - Financial Statements 
              ____________________

     The  following  interim  financial  information  of J.  C.  Penney  Funding
     Corporation ("Funding"), a wholly owned subsidiary of J. C. Penney Company,
     Inc. ("JCPenney"),  is unaudited;  however, in the  opinion of  Funding, it
     includes all  adjustments, consisting  only of  normal recurring  accruals,
     necessary for  a fair  presentation.  The  financial information  should be
     read in  conjunction  with the  audited  financial statements  included  in
     Funding's Annual Report  on Form 10-K  for the 53  weeks ended January  31,
     1998.


     Statements of Income and Reinvested Earnings 
     (Dollars in millions)



                                      13 weeks ended          39 weeks ended 
                                   _____________________   _____________________
                                   Oct. 31,     Oct 25,    Oct. 31,      Oct 25,
                                     1998        1997        1998         1997
                                   ________     _______    ________     ________
     Interest earned from
          JCPenney and affiliates    $  46       $  34        $113       $  146

     Interest expense                   30          23          74           96
                                      ____        ____        ____         ____

     Income before income taxes         16          11          39           50
     Income taxes                        6           4          14           18
                                      ____        ____        ____        _____

     Net income                         10           7          25           32

     Reinvested earnings at
          beginning of period        1,022         989       1,007          964
                                    ______        ____      ______         ____
     Reinvested earnings at
          end of period             $1,032        $996      $1,032         $996
                                    ======        ====      ======         ====

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     Balance Sheets
     (Dollars in millions)



                                                Oct.  31,   Oct.  25,    Jan.31,
                                                  1998         1997         1998
                                                ________     ________    _______

     ASSETS                
     Loans to JCPenney and affiliates            $3,708       $3,378      $2,591
                                                 ______       ______      ______

                                                 $3,708       $3,378      $2,591
                                                 ======       ======      ======
     LIABILITIES AND EQUITY OF JCPENNEY

     Short-term debt                             $2,518       $2,218      $1,416

     Due to JCPenney                                 13           19          23
                                                 ______       ______      ______

      
     Total liabilities                           $2,531       $2,237      $1,439

     Equity of JCPenney:
          Common stock (including 
          contributed capital), par 
          value $100:
          Authorized, 750,000 shares
          Issued, 500,000 shares                   $145         $145        $145

     Reinvested earnings                         $1,032         $996      $1,007
                                                 ______       ______      ______

     Total equity of JCPenney                    $1,177       $1,141      $1,152
                                                 ______       ______      ______
                                                 $3,708       $3,378      $2,591
                                                 ======       ======      ======

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     Consolidated Statements of Cash Flows
     (Dollars in millions)




                                                     39 weeks ended  
                                              _________________________
                                                Oct. 31,     Oct. 25,
                                                 1998           1997    
                                              __________   __________

     Operating Activities          
          Net Income                            $    25      $    32 
          (Increase) Decrease in loans 
          to  JCPenney                           (1,117)       1,684

          (Decrease) Increase in amount due
          to JCPenney                               (10)          18    
                                                ________       _____
                                                 (1,102)       1,734       
                                                ________      ______

     Financing Activities
         Increase (Decrease) in short-term
         debt                                     1,102       (1,734)    
                                                  _____       _______


     Increase (Decrease) in cash                     -0-          -0-

     Cash at beginning of year                       -0-          -0-      
                                                 _______       ______

     Cash at end of second quarter               $   -0-       $  -0-      
                                                 =======       ======

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


     Under the terms of the loan agreement which provides for unsecured loans to
     be made by Funding to JCPenney and the receivables agreement pursuant to
     which Funding may purchase an undivided interest in certain JCPenney
     customer receivables, Funding derives earnings on loans to JCPenney and
     income from charges to JCPenney.  The income of Funding is designed to
     cover Funding's fixed charges (interest expense) at a coverage ratio
     mutually agreed upon by Funding and JCPenney.  The earnings to fixed
     charges coverage ratio has historically been at least one and one-half
     times.

     Since 1986, Funding has provided financing to JCPenney in accordance with
     the loan agreement and no receivable balances have been purchased.

     Funding is not and has not been involved in the administration of
     JCPenney's retail credit operation and does not bear any expenses or
     receive any finance charge revenue connected therewith.

     For the third quarter of 1998, income, expenses, and provision for taxes
     increased as compared with the third quarter of 1997, as a result of 
     higher average borrowing levels. Borrowing levels averaged $2,172 million 
     during the 1998 third quarter as compared with $1,664 million during the
     comparable 1997 period. Average interest rates for the third quarter of
     1998 decreased 9 basis points as compared with the third quarter of 1997.
     For the nine month period ended October 31, 1998, income, expenses, and
     provision for taxes decreased as compared to the 1997 comparable period.
     These decreases were a result of lower average borrowing levels. Borrowing 
     levels averaged $1,781 million for the first nine months of 1998 as 
     compared with $2,330 million in the comparable 1997 period. 1997 higher 
     borrowing levels were required to fund the JCPenney acquisition of Eckerd.
     For the nine month period in 1998, average rates increased 10 basis points 
     as compared with the same period in 1997.  At October 31, 1998 borrowing 
     levels were $2,518 million as compared with $ 2,218 million at October 25, 
     1997. 

     In October 1996, JCPenney formed a companywide task force to provide
     guidance to operating and support departments, including Funding, and to
     monitor the progress of efforts to address Year 2000 issues.  It is
     expected that compliance work will be substantially completed by the end of
     1998. Total costs associated with these efforts are not expected to have a
     material impact on the financial results of either JCPenney or Funding.  In
     addition, Funding has communicated with its commercial paper dealers to
     determine their Year 2000 compliance readiness.  However, there can be no
     guarantee that the systems of these commercial paper dealers, on which
     Funding relies, will be timely converted, or that a failure to convert
     would not have a material adverse effect on Funding's 


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     operations. JCPenney has developed contingency plans to address potential 
     Year 2000 disruptions.  These plans include business continuity plans that 
     address accessibility and functionality of JCPenney and Funding's 
     facilities as well as steps to be taken if an event causes failure of a 
     system.

     PART II - OTHER INFORMATION


          Item 6.     Exhibits and Reports on Form 8-K   
                      ________________________________

               (a)     Exhibits

                    The following document is filed as an exhibit to this
                    report:
               
                    27     Financial Data Schedule for the nine months ended 
                           Oct. 31, 1998.

               (b)  Reports on Form 8-K      
                    ___________________
                    None



                                   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.





                                        J. C. PENNEY FUNDING CORPORATION


                                        By:  /s/ W. J. Alcorn 
                                            _________________________
                                                 W. J. Alcorn
                                              Controller
                                              (Principal Accounting Officer)






     Date: December 14, 1998