UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q
                                   (Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
ACT OF 1934

                For the quarterly period ended September 30, 2009

                                       OR

|_|  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: 0-23908

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

                              California 33-0531301
                (State or other jurisdiction of (I.R.S. Employer
               incorporation or organization) Identification No.)

                   17782 Sky Park Circle Irvine, CA 92614-6404
                    (Address of principal executive offices)

                                 (714) 662-5565
                               (Telephone number)

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 by check mark whether the registrant has submitted  electronically  and
posted on its corporate Web site, if any, every  Interactive  Data File required
to be submitted and posted  pursuant to Rule 405 of  Regulation  S-T (232.405 of
this chapter)  during the  preceding 12 months (or for such shorter  period that
the registrant was required to submit and post such files).

Yes ___No _X__

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. (Check one):

Large accelerated  filer___  Accelerated  filer___  Non-accelerated  filer___X__
Smaller reporting company___

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange
Act).
Yes ___No _X__

<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                               INDEX TO FORM 10-Q

                For the Quarterly Period Ended September 30, 2009

PART I. FINANCIAL INFORMATION

         Item 1. Financial Statements

           Balance Sheets
                As of September 30, 2009 and March 31, 2009....................3

           Statements of Operations
                For the Three and Six Months Ended September 30, 2009 and 2008.4

           Statement of Partners' Deficit
                For the Six Months Ended September 30, 2009....................5

           Statements of Cash Flows
                For the Six Months Ended September 30, 2009 and 2008...........6

           Notes to Financial Statements.......................................7

         Item 2. Management's Discussion and Analysis of Financial
            Condition and Results of Operations...............................15

         Item 3. Quantitative and Qualitative Disclosures about Market Risks..16

         Item 4T. Controls and Procedures.....................................16

PART II. OTHER INFORMATION

         Item 1. Legal Proceedings............................................17

         Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.17

         Item 3.  Defaults Upon Senior Securities.............................17

         Item 4.  Submission of Matters to a Vote of Security Holders.........17

         Item 5.  Other Information...........................................17

         Item 6.  Exhibits ...................................................18

         Signatures ..........................................................19

                                       2

<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                                 BALANCE SHEETS
                                   (Unaudited)

                 See accompanying notes to financial statements

<TABLE>
<CAPTION>

                                                                  September 30, 2009                  March 31, 2009
                                                                -----------------------             -------------------
                                                                <S>                                 <C>

ASSETS

Cash                                                             $              200,894              $          234,631
Investments in Local Limited Partnerships, net (Note 2)                               -                               -
                                                                -----------------------             -------------------

         Total Assets                                            $              200,894              $          234,631
                                                                =======================             ===================


LIABILITIES AND PARTNERS' DEFICIT

Liabilities:
 Accrued fees and expenses due to
  General Partner and affiliates (Note 3)                        $            2,014,218              $        1,945,760
                                                                -----------------------             -------------------

Partners' Deficit:
  General Partner                                                             (188,265)                       (187,243)
  Limited Partners (30,000 Partnership Units
     authorized; 18,000 Partnership Units issued and
outstanding)                                                                (1,625,059)                     (1,523,886)
                                                                -----------------------             -------------------
     Total Partners' Deficit                                                (1,813,324)                     (1,711,129)
                                                                -----------------------             -------------------

        Total Liabilities and Partners' Deficit                  $              200,894              $          234,631
                                                                =======================             ===================
</TABLE>

                 See accompanying notes to financial statements
                                       3

<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                            STATEMENTS OF OPERATIONS

         For the Three and Six Months Ended September 30, 2009 and 2008
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                            2009                                    2008
                                            -------------------------------------   -------------------------------------
                                              Three Months         Six Months        Three Months          Six Months
                                            -----------------   -----------------   ----------------    -----------------
                                            <S>                 <C>                 <C>                 <C>

Distribution income                          $              -    $              -    $         4,825     $         10,681
Reporting fees                                          9,111              15,996                  -                    -
                                            -----------------   -----------------   ----------------    -----------------

    Total operating income                              9,111              15,996              4,825               10,681
                                            -----------------   -----------------   ----------------    -----------------

Operating expenses:
  Amortization (Note 2)                                     -                   -              1,996                3,992
  Asset management fees (Note 3)                       40,335              80,670             44,422               89,768
  Legal and accounting fees                            35,372              36,175                  -                  816
  Impairment loss                                           -                   -              6,134            1,501,366
  Other                                                    83               1,461                119                1,966
                                            -----------------   -----------------   ----------------    -----------------

    Total operating expenses                           75,790             118,306             52,671            1,597,908
                                            -----------------   -----------------   ----------------    -----------------

Loss from operations                                 (66,679)           (102,310)           (47,846)          (1,587,227)

Equity in losses of Local
   Limited Partnerships (Note 2)                            -                   -           (15,297)             (28,903)

Gain on sale of Local
   Limited Partnership                                      -                   -                 -                     1

Interest income                                            43                 115                28                    57
                                            -----------------   -----------------   ----------------    -----------------

Net loss                                     $       (66,636)    $      (102,195)  $        (63,115)     $    (1,616,072)
                                            =================   =================   ================    =================

Net loss allocated to:
  General Partner                            $          (666)    $        (1,022)  $           (631)     $       (16,161)
                                            =================   =================   ================    =================

  Limited Partners                           $       (65,970)    $      (101,173)  $        (62,484)     $    (1,599,911)
                                            =================   =================   ================    =================

Net loss per Partnership Unit                $            (4)    $            (6)  $             (3)     $           (89)
                                            =================   =================   ================    =================

Outstanding weighted Partnership
    Units                                             18,000               18,000             18,000               18,000
                                            =================   =================   ================    =================
</TABLE>

                 See accompanying notes to financial statements
                                       4

<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                         STATEMENT OF PARTNERS' DEFICIT

                   For the Six Months Ended September 30, 2009
                                   (Unaudited)
<TABLE>
<CAPTION>


                                                            General               Limited
                                                            Partner              Partners                Total
                                                         -----------------     ----------------   ----------------------
                                                        <S>                   <C>                <C>

Partners' deficit at March 31, 2009                      $       (187,243)     $    (1,523,886)   $          (1,711,129)

Net loss                                                           (1,022)            (101,173)                (102,195)
                                                         -----------------     ----------------   ----------------------

Partners' deficit at September 30, 2009                  $       (188,265)     $    (1,625,059)   $          (1,813,324)
                                                         =================     ================   ======================
</TABLE>

                 See accompanying notes to financial statements
                                       5
<PAGE>


                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                            STATEMENTS OF CASH FLOWS

              For the Six Months Ended September 30, 2009 and 2008
                                   (Unaudited)
<TABLE>
<CAPTION>


                                                                              2009                      2008
                                                                        ------------------        ------------------
                                                                        <S>                       <C>

Cash flows from operating activities:
  Net loss                                                               $        (102,195)        $     (1,616,072)
     Adjustments to reconcile net loss to
       net cash used in operating activities:
       Amortization                                                                      -                     3,992
       Equity in losses of Local Limited Partnerships                                    -                    28,903
       Impairment loss                                                                   -                 1,501,366
       Change in accrued fees and expenses due to
       General Partner and affiliates                                               68,458                    38,068
       Gain on sale of Local Limited Partnership                                         -                       (1)
                                                                        ------------------        ------------------

Net cash used in operating activities                                             (33,737)                  (43,744)
                                                                        ------------------        ------------------

Cash flows from investing activities:
       Distributions received from Local Limited Partnerships                            -                    39,572
       Proceeds from sale of investment in Local Limited
           Partnership                                                                   -                         1
                                                                        ------------------        ------------------
Net cash provided by investing activities                                                -                    39,573
                                                                        ------------------        ------------------

Net decrease in cash                                                              (33,737)                   (4,171)

Cash, beginning of period                                                          234,631                   228,980
                                                                        ------------------        ------------------
Cash, end of period                                                      $         200,894         $         224,809
                                                                        ==================        ==================

SUPPLEMENTAL DISCLOSURE
  OF CASH FLOW INFORMATION:

Taxes paid                                                               $               -         $               -
                                                                        ==================        ==================
</TABLE>

                 See accompanying notes to financial statements
                                       6

<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS

                For the Quarterly Period Ended September 30, 2009
                                   (Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------

General
-------

The accompanying  condensed unaudited financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information and with the instructions to Form 10-Q
for quarterly  reports under Section 13 or 15(d) of the Securities  Exchange Act
of 1934.  Accordingly,  they do not include all of the information and footnotes
required by  accounting  principles  generally  accepted in the United States of
America for complete  financial  statements.  In the opinion of management,  all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the six months ended
September  30, 2009 are not  necessarily  indicative  of the results that may be
expected  for the fiscal year ending March 31,  2010.  For further  information,
refer  to  the  financial  statements  and  footnotes  thereto  included  in the
Partnership's  annual  report on Form 10-K for the fiscal  year ended  March 31,
2009.

Organization
------------

WNC  California  Housing  Tax  Credits  III,  L.P.,  (the  "Partnership"),  is a
California Limited  Partnership formed under the laws of the State of California
on October 5, 1992 and began  operations on July 19, 1993. The  Partnership  was
formed to acquire limited  partnership  interests in other limited  partnerships
("Local  Limited   Partnerships")   which  own  multi-family  housing  complexes
("Housing  Complexes")  that are  eligible  for Federal  low income  housing tax
credits ("Low Income  Housing Tax  Credits").  The local  general  partners (the
"Local   General   Partners")   of  each  Local   Limited   Partnership   retain
responsibility  for maintaining,  operating and managing the Housing  Complexes.
Each  Local  Limited  Partnership  is  governed  by  its  agreement  of  limited
partnership (the "Local Limited Partnership Agreement").

The general partner of the Partnership is WNC Tax Credit Partners III, L.P. (the
"General Partner"). WNC & Associates, Inc. ("Associates") is the general partner
of the General Partner. The chairman and president of Associates owns all of the
outstanding  stock of Associates.  The business of the  Partnership is conducted
primarily through Associates as the Partnership has no employees of its own.

The Partnership  shall continue in full force and effect until December 31, 2050
unless  terminated  prior to that date pursuant to the partnership  agreement or
law.

The financial  statements  include only activity relating to the business of the
Partnership,  and do not give  effect to any assets that the  partners  may have
outside of their interests in the Partnership, or to any obligations,  including
income taxes, of the partners.

Pursuant to a  registration  statement  filed with the  Securities  and Exchange
Commission, on February 17, 1993, the Partnership commenced a public offering of
30,000 units of limited partnership interest ("Partnership Units") at a price of
$1,000 per Partnership  Unit. As of the close of the public offering on July 22,
1994, a total of 17,990  Partnership  Units  representing  $17,990,000  had been
sold.  During 1995, an additional 10 Partnership  Units amounting to $10,000 was
collected on subscriptions  accepted and previously  deemed  uncollectible.  The
General  Partner  has a 1%  interest in  operating  profits and losses,  taxable
income and losses,  in cash available for distribution  from the Partnership and
Low  Income  Housing  Tax  Credits  of the  Partnership.  The  investors  in the
Partnership  ("Limited  Partners")  will be allocated the remaining 99% of these
items in proportion to their respective investments.

The  proceeds  from the  disposition  of any of the  Local  Limited  Partnership
Housing  Complexes will be used first to pay debts and other obligations per the
respective Local Limited Partnership Agreement. Any remaining proceeds will then
be paid to the  Partnership.  The sale of a Housing  Complex  may be  subject to
other restrictions and obligations.

                                       7

<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                For the Quarterly Period Ended September 30, 2009
                                   (Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
--------------------------------------------------------------

Accordingly,  there can be no assurance that a Local Limited Partnership will be
able to sell its Housing Complex.  Even if it does so, there can be no assurance
that any  significant  amounts of cash will be distributed  to the  Partnership.
Should  such  distributions  occur,  the  Limited  Partners  will be entitled to
receive  distributions equal to their capital  contributions and their return on
investment (as defined in the  Partnership  Agreement) and the General  Partners
would then be entitled to receive proceeds equal to their capital  contributions
from  the  remainder.  Any  additional  sale  or  refinancing  proceeds  will be
distributed  90% to the Limited  Partners  (in  proportion  to their  respective
investments) and 10% to the General Partners.

Risks and Uncertainties
-----------------------

An investment in the  Partnership  and the  Partnership's  investments  in Local
Limited  Partnerships  and their Housing  Complexes are subject to risks.  These
risks may impact the tax benefits of an investment in the  Partnership,  and the
amount of proceeds  available for distribution to the Limited Partners,  if any,
on liquidation of the Partnership's investments. Some of those risks include the
following:

The  Low  Income   Housing  Tax  Credits   rules  are   extremely   complicated.
Noncompliance  with these rules results in the loss of future Low Income Housing
Tax  Credits  and the  fractional  recapture  of Low Income  Housing Tax Credits
already taken. In most cases the annual amount of Low Income Housing Tax Credits
that an  individual  can use is limited to the tax liability due on the person's
last $25,000 of taxable income. The Local Limited  Partnerships may be unable to
sell the Housing  Complexes  at a price which  would  result in the  Partnership
realizing cash distributions or proceeds from the transaction.  Accordingly, the
Partnership  may be unable to distribute any cash to its Limited  Partners.  Low
Income  Housing Tax Credits may be the only  benefit from an  investment  in the
Partnership.

The Partnership has invested in a limited number of Local Limited  Partnerships.
Such  limited  diversity  means that the  results of  operation  of each  single
Housing  Complex  will have a greater  impact on the  Partnership.  With limited
diversity,   poor   performance   of  one  Housing   Complex  could  impair  the
Partnership's ability to satisfy its investment objectives. Each Housing Complex
is subject to mortgage  indebtedness.  If a Local Limited  Partnership failed to
pay its  mortgage,  it  could  lose  its  Housing  Complex  in  foreclosure.  If
foreclosure  were to occur during the first 15 years,  the loss of any remaining
future Low Income  Housing Tax  Credits,  a  fractional  recapture  of prior Low
Income Housing Tax Credits,  and a loss of the  Partnership's  investment in the
Housing  Complex  would  occur.  The  Partnership  is  a  limited  partner  or a
non-managing  member  of  each  Local  Limited  Partnership.   Accordingly,  the
Partnership  will have very  limited  rights with respect to  management  of the
Local  Limited  Partnerships.  The  Partnership  will rely  totally on the Local
General  Partners.  Neither  the  Partnership's  investments  in  Local  Limited
Partnerships,  nor  the  Local  Limited  Partnerships'  investments  in  Housing
Complexes,  are readily marketable.  To the extent the Housing Complexes receive
government financing or operating subsidies,  they may be subject to one or more
of the  following  risks:  difficulties  in  obtaining  tenants  for the Housing
Complexes;  difficulties  in  obtaining  rent  increases;  limitations  on  cash
distributions;  limitations  on  sales  or  refinancing  of  Housing  Complexes;
limitations on transfers of interests in Local Limited Partnerships; limitations
on removal of Local  General  Partners;  limitations  on subsidy  programs;  and
possible changes in applicable regulations. Uninsured casualties could result in
loss of property and Low Income  Housing Tax Credits and recapture of Low Income
Housing Tax  Credits  previously  taken.  The value of real estate is subject to
risks  from  fluctuating  economic   conditions,   including  employment  rates,
inflation,  tax, environmental,  land use and zoning policies, supply and demand
of similar Housing Complexes, and neighborhood conditions, among others.

The  ability of Limited  Partners to claim tax losses  from the  Partnership  is
limited.  The IRS may audit the  Partnership or a Local Limited  Partnership and
challenge the tax treatment of tax items.  The amount of Low Income  Housing Tax
Credits and tax losses allocable to Limited Partners could be reduced if the IRS
were successful in such a challenge.  The  alternative  minimum tax could reduce
tax benefits from an investment  in the  Partnership.  Changes in tax laws could
also impact the tax benefits from an investment  in the  Partnership  and/or the
value of the Housing Complexes.

                                       8

<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                For the Quarterly Period Ended September 30, 2009
                                   (Unaudited)

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
-------------------------------------------------------------

All of the Low Income  Housing Tax Credits  anticipated  to be realized from the
Local  Limited  Partnerships  have  been  realized.  The  Partnership  does  not
anticipate  being  allocated  any Low Income  Housing Tax Credits from the Local
Limited  Partnerships in the future.  Until the Local Limited  Partnerships have
completed  the  15  year  Low  Income  Housing  Tax  Credit   compliance  period
("Compliance  Period"),  risks exist for potential recapture of prior Low Income
Housing Tax Credits received.

No trading  market for the  Partnership  Units exists or is expected to develop.
Limited  Partners  may be unable to sell  their  Partnership  Units  except at a
discount  and  should  consider  their  Partnership  Units  to  be  a  long-term
investment.  Individual  Limited Partners will have no recourse if they disagree
with actions authorized by a vote of the majority of Limited Partners.

The  Partnership   currently  has  insufficient  working  capital  to  fund  its
operations.  Associates have agreed to continue  providing  advances  sufficient
enough  to  fund  the  operations  and  working  capital   requirements  of  the
Partnership through November 30, 2010.

Anticipated  future and  existing  cash  resources  of the  Partnership  are not
sufficient   to  pay  existing   liabilities   of  the   Partnership.   However,
substantially all of the existing  liabilities of the Partnership are payable to
the General  Partner and/or its  affiliates.  Though the amounts  payable to the
General Partner and/or its affiliates are contractually  currently payable,  the
Partnership  anticipates that the General Partner and/or its affiliates will not
require the payment of these contractual  obligations until capital reserves are
in excess of the aggregate of then  existing  contractual  obligations  and then
anticipated future foreseeable  obligations of the Partnership.  The Partnership
would be adversely  affected  should the General  Partner  and/or its affiliates
demand current  payment of the existing  contractual  obligations and or suspend
services for this or any other reason.

Exit Strategy
-------------

The  Compliance  Period for a Housing  Complex is generally  15 years  following
construction or  rehabilitation  completion.  Associates was one of the first in
the industry to offer syndicated  investments in Low Income Housing Tax Credits.
The initial programs are completing their Compliance Periods.

With that in mind,  the General  Partner is continuing its review of the Housing
Complexes,  with special  emphasis on the more mature Housing  Complexes such as
any that have satisfied the IRS compliance  requirements.  The review  considers
many factors, including extended use requirements (such as those due to mortgage
restrictions  or state  compliance  agreements),  the  condition  of the Housing
Complexes, and the tax consequences to the Limited Partners from the sale of the
Housing Complexes.

Upon  identifying  those  Housing  Complexes  with the highest  potential  for a
successful sale, refinancing or syndication,  the Partnership expects to proceed
with  efforts to  liquidate  them.  The  objective  is to  maximize  the Limited
Partners'  return  wherever   possible  and,   ultimately,   to  wind  down  the
Partnership.  Local Limited Partnership interests may be disposed of any time by
the  General  Partner  in its  discretion.  While  liquidation  of  the  Housing
Complexes continues to be evaluated, the dissolution of the
Partnership was not imminent as of September 30, 2009.

Prior to the quarter ended  September  30, 2009,  the  Partnership  had sold its
interests in three Local Limited  Partnerships;  Rosewood Apartments L.P., Venus
Retirement  Village Ltd. and Winters  Investment Group. As of September 30, 2009
no additional Local Limited Partnership had been identified for disposition.

                                       9

<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                For the Quarterly Period Ended September 30, 2009
                                   (Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
--------------------------------------------------------------

Method of Accounting for Investments in Local Limited Partnerships
------------------------------------------------------------------

The Partnership accounts for its investments in Local Limited Partnerships using
the equity method of accounting,  whereby the Partnership adjusts its investment
balance for its share of the Local Limited  Partnerships'  results of operations
and for any  contributions  made and  distributions  received.  The  Partnership
reviews the  carrying  amount of an  individual  investment  in a Local  Limited
Partnership for possible  impairment whenever events or changes in circumstances
indicate that the carrying  amount of such  investment  may not be  recoverable.
Recoverability  of such investment is measured by the estimated value derived by
management,  generally  consisting of the sum of the remaining future Low Income
Housing  Tax  Credits  estimated  to be  allocable  to the  Partnership  and the
estimated  residual value to the Partnership.  If an investment is considered to
be impaired, the Partnership reduces the carrying value of its investment in any
such Local Limited  Partnership.  The  accounting  policies of the Local Limited
Partnerships,  generally,  are  expected  to be  consistent  with  those  of the
Partnership.  Costs incurred by the Partnership in acquiring the investments are
capitalized  as part of the investment  account and are being  amortized over 30
years (see Note 2).

"Equity in losses of Local Limited Partnerships" for the periods ended September
30, 2009 and 2008 have been recorded by the Partnership.  Management's  estimate
for the six-month period is based on either actual unaudited results reported by
the Local Limited  Partnerships  or historical  trends in the  operations of the
Local Limited  Partnerships.  In subsequent  annual financial  statements,  upon
receiving the actual annual results reported by the Local Limited  Partnerships,
management  reverses its prior estimate and records the actual results  reported
by  the  Local  Limited   Partnerships.   Equity  in  losses  of  Local  Limited
Partnerships  allocated to the Partnership are not recognized to the extent that
the  investment  balance  would be  adjusted  below zero.  If the Local  Limited
Partnerships  reported net income in future years,  the Partnership  will resume
applying  the equity  method only after its share of such net income  equals the
share of net losses not  recognized  during the  period(s) the equity method was
suspended (see Note 2).

The  Partnership  does not  consolidate the accounts and activities of the Local
Limited  Partnerships,  which are considered  Variable  Interest  Entities under
Generally Accepted Accounting  Principles ("GAAP") for consolidation of variable
interest  entities,  because  the  Partnership  is not  considered  the  primary
beneficiary.   The  Partnership's   balance  in  investments  in  Local  Limited
Partnerships,  plus the risk of  recapture  of Low Income  Housing  Tax  Credits
previously  recognized on such  investments,  represents the maximum exposure to
loss in connection with such investments.  The Partnership's exposure to loss on
the Local  Limited  Partnerships  is mitigated by the  condition  and  financial
performance of the underlying  Housing  Complexes as well as the strength of the
Local  General  Partners  and their  guarantees  against Low Income  Housing Tax
Credits recapture.

Distributions  received by the  Partnership  are accounted for as a reduction of
the investment balance.  Distributions received after the investment has reached
zero are  recognized as income.  As of September 30, 2009, all of the investment
balances had reached zero.

Use of Estimates
----------------

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements,  and the  reported  amounts of revenues and expenses
during the reporting  period.  Actual results could materially differ from those
estimates.

                                       10

<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                For the Quarterly Period Ended September 30, 2009
                                   (Unaudited)

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
-------------------------------------------------------------

Cash and Cash Equivalents
-------------------------

The Partnership considers all highly liquid investments with original maturities
of three months or less when purchased to be cash  equivalents.  As of September
30, 2009 and March 31, 2009, the Partnership had no cash equivalents.

Reporting Comprehensive Income
------------------------------

The  Partnership  had no items of other  comprehensive  income  for all  periods
presented.

Income Taxes
------------

No provision  for income taxes has been recorded in the  accompanying  financial
statements  as any  liabilities  and/or  benefits  for income  taxes flow to the
partners of the  Partnership  and are their  obligations  and/or  benefits.  For
income tax purposes, the Partnership reports on a calendar year basis.

In June 2006, the Financial  Accounting Standards Board ("FASB") issued guidance
for how uncertain tax positions  should be recognized,  measured,  presented and
disclosed in the  financial  statements.  This  requires the  evaluation  of tax
positions  taken  or  expected  to be  taken  in the  course  of  preparing  the
Partnership's   tax  returns  to  determine   whether  the  tax   positions  are
more-likely-than-not  of being sustained upon  examination by the applicable tax
authority,  based  on  the  technical  merits  of the  tax  position,  and  then
recognizing  the tax benefit that is  more-likely-than-not  to be realized.  Tax
positions  not  deemed  to meet  the  more-likely-than-not  threshold  would  be
recorded as a tax expense in the current  reporting  period.  As  required,  the
Partnership  adopted these standards  effective April 1, 2007 and concluded that
the  effect  is  not  material  to its  financial  statements.  Accordingly,  no
cumulative  effect  adjustment  related  to the  adoption  of the  standard  was
recorded.

Net Loss Per Partnership Unit
-----------------------------

Net loss per  Partnership  Unit includes no dilution and is computed by dividing
loss allocated to Limited Partners by the weighted average number of Partnership
Units  outstanding  during  the  period.  Calculation  of  diluted  net loss per
Partnership Unit is not required.

Revenue Recognition
-------------------

The  Partnership  is entitled to receive  reporting  fees from the Local Limited
Partnerships.  The  intent  of  the  reporting  fees  is  to  offset  (in  part)
administrative costs incurred by the Partnership in corresponding with the Local
Limited  Partnerships.  Due to the  uncertainty of the collection of these fees,
the Partnership recognizes reporting fees as collections are made.

Amortization
------------

Acquisition  fees  and  costs  were  being  amortized  over 30 years  using  the
straight-line  method.  Amortization  expense  was $0 and $3,992  during the six
months ended September 30, 2009 and 2008, respectively.

                                       11

<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                For the Quarterly Period Ended September 30, 2009
                                   (Unaudited)

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
-------------------------------------------------------------

Impairment
----------

A loss in value of an  investment in a Local  Limited  Partnership  other than a
temporary  decline is recorded as an impairment loss.  Impairment is measured by
comparing the investment's carrying amount to the sum of the total amount of the
remaining future Low Income Housing Tax Credits estimated to be allocated to the
Partnership  and the estimated  residual  value of the  investment.  For the six
months  ended  September  30,  2009  and  2008  impairment  expense  related  to
investments in Local Limited Partnerships was $0 and $1,501,366, respectively.

The Partnership also evaluates its intangibles for impairment in connection with
its  investments  in Local Limited  Partnerships.  Impairment on  intangibles is
measured by comparing the investments  carrying amount after  impairment and the
related  intangible  assets to the sum of the total of the  remaining Low Income
Housing Tax Credits  allocated to the  Partnership  and the  estimated  residual
value  of the  investment.  No  impairment  loss  was  recorded  on the  related
intangibles during the periods presented.

In previous periods,  when the value of the Partnership's  investment in a Local
Limited  Partnership  had been reduced to zero, the  respective net  acquisition
fees and costs  component  of  investments  in Local  Limited  Partnerships  was
impaired.

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS
--------------------------------------------------

As of the periods  presented,  the  Partnership  owns Local Limited  Partnership
interests in fifteen  Local  Limited  Partnerships.  All of these Local  Limited
Partnership's  own  one  Housing  Complex  consisting  of an  aggregate  of  552
apartment units.  The Local General  Partners of the Local Limited  Partnerships
manage the day to day  operations  of the  entities.  Significant  Local Limited
Partnership  business  decisions  require  approval  from the  Partnership.  The
Partnership, as a Limited Partner, is generally entitled to 99%, as specified in
the Local Limited Partnership  agreements,  of the operating profits and losses,
taxable  income and  losses,  and Low Income  Housing  Tax  Credits of the Local
Limited Partnerships.

The following is a summary of the equity method  activity of the  investments in
Local Limited Partnerships for the periods presented below:

<TABLE>
<CAPTION>

                                                                         For the Six                 For the Year
                                                                         Months Ended                   Ended
                                                                      September 30, 2009            March 31, 2009
                                                                      -------------------         -------------------
                                                                      <S>                         <C>

  Investments per balance sheet, beginning of period                   $                -          $        1,740,459
  Equity in losses of Local Limited Partnerships                                        -                   (179,270)
  Distributions received from Local Limited Partnerships                                -                    (39,570)
  Impairment loss                                                                       -                 (1,513,635)
  Amortization of capitalized acquisition fees and costs                                -                     (7,984)
                                                                      -------------------         -------------------

  Investments per balance sheet, end of period                         $                -          $                -
                                                                      ===================         ===================
</TABLE>

                                       12

<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                For the Quarterly Period Ended September 30, 2009
                                   (Unaudited)

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued
-------------------------------------------------------------

Selected  financial  information for the six months ended September 30, 2009 and
2008 from the unaudited  combined  condensed  financial  statements of the Local
Limited Partnerships in which the partnership has invested is as follows:


                   COMBINED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                              2009                      2008
                                                      ----------------------     --------------------
                                                      <S>                        <C>

  Revenue                                              $           1,801,000      $         2,000,000
                                                      ----------------------     --------------------
  Expenses:
     Operating expenses                                            1,306,000                1,455,000
     Interest expense                                                360,000                  387,000
     Depreciation and amortization                                   518,000                  558,000
                                                      ----------------------     --------------------

  Total expenses                                                   2,184,000                2,400,000
                                                      ----------------------     --------------------

  Net loss                                             $            (383,000)     $         (400,000)
                                                      ======================     ====================

  Net loss allocable to the Partnership                $            (379,000)     $         (395,000)
                                                      ======================     ====================

  Net loss recorded by the Partnership                 $                   -      $          (29,000)
                                                      ======================     ====================
</TABLE>


Certain Local Limited  Partnerships have incurred  significant  operating losses
and/or have  working  capital  deficiencies.  In the event  these Local  Limited
Partnerships continue to incur significant operating losses,  additional capital
contributions  by the Partnership may be required to sustain  operations of such
Local Limited  Partnerships.  If additional  capital  contributions are not made
when they are required,  the Partnership's  investments in certain of such Local
Limited  Partnerships  could be  impaired,  and the loss  and  recapture  of the
related Low Income Housing Tax Credits could occur.

NOTE 3 - RELATED PARTY TRANSACTIONS
-----------------------------------

Under the terms of the  Partnership  Agreement,  the  Partnership has paid or is
obligated to the General Partner or its affiliates for the following items:

(a)  Acquisition  fees  of up to 9% of the  gross  proceeds  from  the  sale  of
     Partnership  Units as compensation for services rendered in connection with
     the  acquisition of Local Limited  Partnerships.  At the end of all periods
     presented,   the  Partnership  incurred  acquisition  fees  of  $1,620,000.
     Accumulated  amortization of these  capitalized  costs was $1,620,000 as of
     September 30, 2009 and March 31, 2009.

(b)  Reimbursement  of costs incurred by the General  Partner or an affiliate in
     connection  with the  acquisition  of  Local  Limited  Partnerships.  These
     reimbursements have not exceeded 1.5% of the gross proceeds.  As of the end
     of all periods  presented,  the Partnership  incurred  acquisition costs of
     $194,019,  which  have  been  included  in  investments  in  Local  Limited
     Partnerships.  Accumulated  amortization  was $194,019 as of September  30,
     2009 and March 31, 2009.

                                       13

<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                For the Quarterly Period Ended September 30, 2009
                                   (Unaudited)

NOTE 3 - RELATED PARTY TRANSACTIONS, continued
----------------------------------------------

(c)  An annual asset  management fee equal to 0.5% of the invested assets of the
     Partnership,   as  defined.   "Invested   Assets"  means  the  sum  of  the
     Partnership's  investment  in Local Limited  Partnership  interests and the
     Partnership's  Allocable share of mortgage loans on and other debts related
     to the Housing Complexes owned by such Local Limited Partnerships.  Fees of
     $80,670 and $89,768 were incurred during the six months ended September 30,
     2009 and 2008, respectively.  The Partnership paid the General Partners and
     or their affiliates $45,000 and $25,000 of those fees during the six months
     ended September 30, 2009 and 2008, respectively.

(d)  Subordinated  Disposition Fee. A subordinated  disposition fee is an amount
     equal to 1% of the sales price of real estate sold.  Payment of this fee is
     subordinated to the Limited  Partners  receiving a preferred  return of 16%
     through  December 31, 2003 and 6% thereafter (as defined in the Partnership
     Agreement)  and is payable  only if the General  Partner or its  affiliates
     render  services in the sales  effort.  No such fees were earned during the
     periods presented.

(e)  The  Partnership  reimburses  the  General  Partner or its  affiliates  for
     operating  expenses incurred by the Partnership and paid for by the General
     Partner or its affiliates on behalf of the Partnership.  Operating  expense
     reimbursements  were  $4,848  and  $31,237  during  the  six  months  ended
     September 30, 2009 and 2008, respectively.

The accrued fees and expenses due to the General Partner and affiliates  consist
of the following at:
<TABLE>
<CAPTION>

                                                                  September 30, 2009            March 31, 2009
                                                                 ----------------------      ----------------------
                                                                 <S>                         <C>

Expenses paid by the General Partner or affiliates
   on behalf of the Partnership                                   $              35,455       $               2,666
Asset management fee payable                                                  1,978,763                   1,943,094
                                                                 ----------------------      ----------------------
   Total                                                          $           2,014,218       $           1,945,760
                                                                 ======================      ======================

</TABLE>

The General  Partner and/or its affiliates do not anticipate  that these accrued
fees will be paid until such time as  capital  reserves  are in excess of future
foreseeable working capital requirements of the Partnership.

                                       14

<PAGE>

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

Forward-Looking Statements

With the exception of the  discussion  regarding  historical  information,  this
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations"  and other  discussions  elsewhere in this Form 10-Q contain forward
looking statements. Such statements are based on current expectations subject to
uncertainties  and other  factors which may involve known and unknown risks that
could  cause  actual  results  of  operations  to differ  materially  from those
projected or implied. Further, certain forward-looking statements are based upon
assumptions about future events which may not prove to be accurate.

Risks and uncertainties  inherent in forward looking statements include, but are
not  limited  to,  the  Partnership  future  cash  flows and  ability  to obtain
sufficient financing, level of operating expenses,  conditions in the Low Income
Housing Tax Credit property market and the economy in general,  as well as legal
proceedings.  Historical results are not necessarily indicative of the operating
results for any future period.

Subsequent  written and oral  forward  looking  statements  attributable  to the
Partnership  or persons  acting on its behalf are  expressly  qualified in their
entirety by  cautionary  statements in this Form 10-Q and in other reports filed
with the Securities and Exchange Commission.  The following discussion should be
read in conjunction with the condensed  unaudited  financial  statements and the
notes thereto included elsewhere in this filing.

The following discussion and analysis compares the results of operations for the
three and six months ended  September  30, 2009 and 2008,  and should be read in
conjunction with the condensed unaudited  financial  statements and accompanying
notes included within this report.

Financial Condition

The  Partnership's  assets at September 30, 2009  consisted of $201,000 in cash.
Liabilities  at September 30, 2009  consisted of  $2,014,000  of accrued  annual
management  fees and amounts due for expenses paid by the General Partner and/or
its affiliates.

Results of Operations

Three Months Ended  September 30, 2009 Compared to Three Months Ended  September
30, 2008. The  Partnership's  net loss for the three months ended  September 30,
2009 was  $(67,000),  reflecting  an increase of $(4,000) from the $(63,000) net
loss for the three months ended September 30, 2008. The increase in net loss was
primarily due to the $(35,000)  increase in legal and  accounting  fees due to a
timing  issue of the  accounting  work  being  performed.  The  impairment  loss
decreased by $6,000  compared to the three months ended  September 30, 2008. The
investment  balance was impaired to zero in the prior year as the Local  Limited
Partnerships  were considered not to have any residual value.  Therefore,  there
was no impairment to record in the three months ended September 30, 2009.  There
was also a $4,000 decrease in asset  management  fees. These fees are calculated
based on the invested  assets,  which  decreased  with the  disposition of three
Local Limited Partnerships late in the prior year. As Local Limited Partnerships
are sold the invested assets decrease,  thereby  decreasing the asset management
fees  incurred.   Amortization  expense  decreased  by  $2,000  as  all  of  the
acquisition fees and costs were written off during the year ended March 31, 2009
when the  investment  balance  was  reduced  to  zero.  Total  operating  income
increased  by  $4,000  due to the  fact  that  Local  Limited  Partnerships  pay
reporting fees and distribution income to the Partnership when the Local Limited
Partnership's  cash flow will  allow for the  payment.  There was also a $15,000
decrease from equity in losses of Local  Limited  Partnerships.  The  investment
balance was reduced to zero during the year ended March 31,  2009,  therefore no
further losses can be recorded.

                                       15

<PAGE>

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

Six Months Ended  September 30, 2009 Compared to Six Months Ended  September 30,
2008. The Partnership's net loss for the six months ended September 30, 2009 was
$(102,000),  reflecting a decrease of $1,514,000 from the  $(1,616,000) net loss
for the six months  ended  September  30,  2008.  The  decrease  in net loss was
largely  due to the  $1,501,000  decrease in  impairment  loss.  The  investment
balance was impaired to zero in the prior year as the Local Limited Partnerships
were  considered  not to  have  any  residual  value.  Therefore,  there  was no
impairment  to record in the current year.  There was also a $9,000  decrease in
asset  management  fees. These fees are calculated based on the invested assets,
which decreased with the disposition of three Local Limited Partnerships late in
the prior year.  As Local  Limited  Partnerships  are sold the  invested  assets
decrease,  thereby  decreasing the asset management fees incurred.  Amortization
expense  decreased  by $4,000  as all of the  acquisition  fees and  costs  were
written off during the year ended March 31, 2009 when the investment balance was
reduced to zero. Total operating income increased by $5,000 due to the fact that
Local Limited  Partnerships  pay reporting fees and  distribution  income to the
Partnership  when the Local Limited  Partnership's  cash flow will allow for the
payment.  The decrease in loss from operation was offset by a $(35,000) increase
in legal and accounting  fees due to a timing issue of the accounting work being
performed.  There was also a  $29,000  decrease  from  equity in losses of Local
Limited Partnerships. The investment balance was reduced to zero during the year
ended March 31, 2009, therefore no further losses can be recorded.

Liquidity and Capital Resources

Six Months Ended  September 30, 2009 Compared to Six Months Ended  September 30,
2008. Net cash used during the six months ended September 30, 2009 was $(34,000)
compared  to net cash used  during the six months  ended  September  30, 2008 of
$(4,000).  The $(30,000) increase in net change in cash was primarily due to the
fact that the  payment of accrued  asset  management  fees  increased  $(20,000)
during the six months ended September 30, 2009.

During the six months ended September 30, 2009 accrued  payables,  which consist
primarily  of  asset  management  fees to the  General  Partner  or  affiliates,
increased by $68,000. The General Partner does not anticipate that these accrued
fees will be paid in full until such time as capital  reserves  are in excess of
future foreseeable working capital requirements of the partnership.

The Partnership  expects its future cash flows,  together with its net available
assets  at  September  30,  2009,  to be  insufficient  to  meet  all  currently
foreseeable  future  cash  requirements.   Associates  has  agreed  to  continue
providing advances  sufficient enough to fund the operations and working capital
requirements of the Partnership through November 30, 2010.

Item 3. Quantitative and Qualitative Disclosures About Market Risks

         NOT APPLICABLE

Item 4T. Controls and Procedures

(a)      Disclosure controls and procedures
         -----------------------------------

          As of the end of the period covered by this report,  the Partnership's
          General Partner,  under the supervision and with the  participation of
          the Chief Executive Officer and Chief Financial Officer of Associates,
          carried out an evaluation of the  effectiveness  of the  Partnership's
          "disclosure controls and procedures" as defined in Securities Exchange
          Act of 1934 Rule  13a-15 and  15d-15.  Based on that  evaluation,  the
          Chief  Executive  Officer and Chief  Financial  Officer have concluded
          that, as of the end of the period covered by this report,

                                       16

<PAGE>

          the  Partnership's   disclosure   controls  and  procedures  were  not
          effective to ensure that material information required to be disclosed
          in the  Partnership's  periodic  report  filings with SEC is recorded,
          processed, summarized and reported within the time period specified by
          the  SEC's  rules  and  forms,   consistent  with  the  definition  of
          "disclosure controls and procedures" under the Securities Exchange Act
          of 1934.

          The Partnership must rely on the Local Limited Partnerships to provide
          the  Partnership  with  certain  information  necessary  to the timely
          filing  of  the  Partnership's   periodic  reports.   Factors  in  the
          accounting at the Local Limited Partnerships have caused delays in the
          provision  of such  information  during past  reporting  periods,  and
          resulted in the  Partnership's  inability to file its periodic reports
          in a timely manner.

          Once the Partnership has received the necessary  information  from the
          Local Limited Partnerships,  the Chief Executive Officer and the Chief
          Financial Officer of Associates believe that the material  information
          required to be disclosed in the Partnership's  periodic report filings
          with SEC is effectively recorded, processed,  summarized and reported,
          albeit not in a timely manner. Going forward, the Partnership will use
          the means reasonably within its power to impose procedures designed to
          obtain from the Local Limited  Partnerships the information  necessary
          to the timely filing of the Partnership's periodic reports.

(b)      Changes in internal controls
         ----------------------------

          There were no  changes  in the  Partnership's  internal  control  over
          financial  reporting that occurred  during the quarter ended September
          30,  2009  that  materially  affected,  or are  reasonably  likely  to
          materially affect,  the Partnership's  internal control over financial
          reporting.

Part II. Other Information

Item 1.  Legal Proceedings

         NONE

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

         NONE

Item 3.  Defaults Upon Senior Securities

         NONE

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

         NONE

Item 5.  Other Information

         NONE

                                       17
<PAGE>


Item 6.   Exhibits

31.1      Certification  of the  Principal  Executive  Officer  pursuant to Rule
          13a-14  and  15d-14,  as  adopted  pursuant  to  section  302  of  the
          Sarbanes-Oxley Act of 2002. (filed herewith)


31.2      Certification  of the  Principal  Financial  Officer  pursuant to Rule
          13a-14  and  15d-14,  as  adopted  pursuant  to  section  302  of  the
          Sarbanes-Oxley Act of 2002. (filed herewith)

32.1      Section 1350  Certification  of the Chief  Executive  Officer.  (filed
          herewith)

32.2      Section 1350  Certification  of the Chief  Financial  Officer.  (filed
          herewith)

                                       18

<PAGE>

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.

WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

By:  WNC California Tax Credit Partners III General Partner

By:  WNC & Associates, Inc.         General Partner




By:  /s/ Wilfred N. Cooper Jr.
     -------------------------

Wilfred N. Cooper, Jr.
President and Chief Executive Officer of WNC & Associates, Inc.

Date:  November 9, 2009




By:  /s/ Melanie R. Wenk
     -------------------

Melanie R. Wenk
Vice President - Chief Financial Officer of WNC & Associates, Inc.

Date: November 9, 2009

                                       19