UNITED STATES
                          SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON, D.C. 20549

                                      FORM 10-Q



[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED APRIL 5, 1998.

[ ] 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 0-19955
                                   -------


                               MOLECULAR DYNAMICS, INC.
                (Exact name of registrant as specified in its charter)



           Delaware                                94-3050031
    (State or other jurisdiction            (IRS Employer Identification
     of incorporation or organization)       Number)



                 928 EAST ARQUES AVENUE, SUNNYVALE, CALIFORNIA 94086
                (Address of principal executive offices and zip code)

                                    (408) 773-1222
                 (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days.

                     [X]  Yes       [ ] No


As of April 27, 1998, 10,442,895 shares of Common Stock of the Registrant were 
outstanding.


<PAGE>


MOLECULAR DYNAMICS, INC.

INDEX



PART I.  FINANCIAL INFORMATION


Item 1.Financial Statements                                     Page(s)   


Condensed Consolidated Balance Sheets
March 31, 1998 (unaudited) and December 31, 1997                   3         


Condensed Consolidated Statements of Income
Three months ended March 31, 1998 and 1997 (unaudited)             4


Condensed Consolidated Statements of Cash Flows
Three months ended March 31, 1998 and 1997 (unaudited)             5


Notes to Condensed Consolidated Financial Statements 
(unaudited)                                                        6-9


Item 2 Management's Discussion and Analysis of 
Financial Condition and Results of Operations                     10-15


PART II.  OTHER INFORMATION

Item 6 Exhibits and Reports on Form 8-K                           16


Signatures                                                        17



<PAGE>

                      MOLECULAR DYNAMICS, INC. AND SUBSIDIARIES
                        Condensed Consolidated Balance Sheets 
                                  (In thousands) 

<TABLE>
<CAPTION>
                                                      March 31,     December 31,
                                                      1998          1997
                                                      ------------  ------------
<S>                                                   <C>           <C>
                     ASSETS
Current assets:
   Cash and cash equivalents                               $6,176       $11,571
   Securities available-for-sale                           14,846         8,558
   Accounts receivable, net                                15,807        14,403
   Other accounts receivable                                6,854         5,721
   Inventories                                             10,576        10,675
   Prepaids and other current assets                          745           560
                                                      ------------  ------------
                Total current assets                       55,004        51,488
Property and equipment, net                                 4,669         4,722
Other assets, net                                           3,409         2,845
                                                      ------------  ------------
                                                          $63,082       $59,055
                                                      ============  ============

      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                        $3,481        $3,554
   Accrued expenses                                         6,337         5,491
   Factoring liability                                        816           447
   Unearned revenue and customer advances                   8,998         7,645
                                                      ------------  ------------
                Total current liabilities                  19,632        17,137
                                                      ------------  ------------
Commitments and contingencies

Stockholders' equity
   Common stock and additional paid-in capital             40,272        39,571
   Retained earnings                                        3,280         2,434
   Cumulative translation adjustment                          (94)          (94)
   Unrealized (loss) gain on securities-        
    available-for-sale                                        (8)            7
                                                      ------------  ------------
                  Total stockholders' equity               43,450        41,918
                                                      ------------  ------------
                                                          $63,082       $59,055
                                                      ============  ============
</TABLE>
                      See accompanying notes. 
<PAGE>
                    MOLECULAR DYNAMICS, INC. AND SUBSIDIARIES 
                   Condensed Consolidated Statements of Income
                      (In thousands, except per share data) 
                                     (unaudited)
<TABLE>
<CAPTION>
                                     Three Months Ended
                                         March 31,
                                    ---------------------
                                    1998       1997
                                    ---------- ----------
<S>                                 <C>        <C>
Sales and other revenue               $14,080    $13,006
Cost of sales and other revenue         6,614      5,547
                                    ---------- ----------
       Gross profit                     7,466      7,459
                                    ---------- ----------
Operating expenses:
    Research and development, net       1,773      2,070
    Sales and marketing                 3,620      3,244
    General and administrative          1,232      1,172
                                    ---------- ----------
       Total operating expenses         6,625      6,486
                                    ---------- ----------
       Operating income                   841        973

Interest income, net                      295        274
Other (expense) income, net               (10)       (43)
                                    ---------- ----------
       Income before income taxes       1,126      1,204

Income tax expense                        281        144
                                    ---------- ----------
       Net income                        $845     $1,060
                                    ========== ==========
Earnings per share:
  Basic                                 $0.08      $0.11

  Diluted                               $0.08      $0.10


Shares used to compute earnings
per share:
  Basic                                10,406      9,951

  Diluted                              11,173     11,068

</TABLE>
                      See accompanying notes. 
<PAGE>
                    MOLECULAR DYNAMICS, INC. AND SUBSIDIARIES 
                 Condensed Consolidated Statements of Cash Flows 
                                 (In thousands) 
<TABLE>
<CAPTION>
                                                             Three Months Ended
                                                                 March 31,
                                                            -------------------
                                                            1998      1997
                                                            --------- ---------
<S>                                                         <C>       <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
      Net cash provided by (used in) operating activities       $693   ($1,622)

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchases of property and equipment                         (448)     (831)
    Proceeds from sale of property and equipment                  8        --
    Capitalized software development costs                      (482)     (136)
    Purchases of securities available-for-sale               (13,883)  (10,921)
    Maturities and sales of securities available-for-sale      7,580     8,876
    Other assets                                                (250)      157
                                                            --------- ---------
      Net cash used in investing activities                   (7,475)   (2,855)
                                                            --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Reissuance of treasury stock                                 --      1,888
    Proceeds from stock option exercises                          54       --
    Proceeds from employee stock purchase plan                   648       --
    Net increase (decrease) in factoring liability               369       (62)
                                                            --------- ---------
      Net cash provided by financing activities                1,071     1,826
                                                            --------- ---------
Effect of exchange rate changes on cash                          316       149
                                                            --------- ---------
Net decrease in cash and cash equivalents                     (5,395)   (2,502)
Cash and cash equivalents at beginning of period              11,571     8,024
                                                            --------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                    $6,176    $5,522
                                                            ========= =========
</TABLE>
     See accompanying notes to Condensed Consolidated Financial Statements.
<PAGE>

MOLECULAR DYNAMICS, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


NOTE 1 - Basis of Presentation

        The accompanying condensed consolidated balance sheets 
of Molecular Dynamics, Inc. and subsidiaries (Molecular 
Dynamics or the Company) as of March 31, 1998 and December 
31, 1997 and the related condensed consolidated statements 
of income and cash flows for the three months ended March 
31, 1998 and 1997 have been prepared on substantially the 
same basis as are the Company's annual consolidated 
financial statements.  In the opinion of management, the 
financial statements reflect all adjustments, consisting 
only of normal recurring adjustments, necessary for a fair 
presentation of the financial position, operating results 
and cash flows for those periods presented.  The results of 
operations for the three months ended March 31, 1998 are not 
necessarily indicative of results to be expected for the 
entire year.  These condensed consolidated financial 
statements should be read in conjunction with the 
consolidated financial statements, and notes thereto, for 
the year ended December 31, 1997 included in the Company's 
Annual Report on Form 10-K.

        The Company's fiscal year end is the Sunday nearest 
December 31, and the Company operates and reports on 13-week 
quarterly periods, except in years consisting of 53 weeks, 
such as the 1998 fiscal year.  In that case, the first 
quarter of the fiscal year consists of 14 weeks.  For 
clarity of presentation the Company has indicated that its 
first quarter ended March 31 and its 1997 fiscal year ended 
December 31, whereas in fact, the Company's first quarter 
for fiscal years 1998 and 1997 ended on April 5, 1998 and 
March 30, 1997, respectively, and its fiscal year ended on 
December 28, 1997. 

NOTE 2 - INVENTORIES

  Inventories consisted of (in thousands):
                                              March 31,     December 31,
                                                 1998           1997
                                             ------------   ------------

         Raw materials                            $5,379         $5,842
         Work in process                           2,313          2,328
         Finished goods                            2,884          2,505
                                             ------------   ------------
                                                 $10,576        $10,675
                                             ============   ============

NOTE 3 - EARNINGS PER SHARE

     In 1997, the Company adopted Statement of Financial Accounting Standard
No. 128, "Earnings Per Share (SFAS No. 128), which requires the presentation
of basic earnings per share (EPS) and, for companies with complex capital 
structures, diluted EPS.  All prior periods have been restated in accordance
with SFAS No. 128.

   The calculation of basic and diluted earnings (loss) per share is as follows
   (in thousands, except per share amounts):

                                             Three Months   Three Months
                                                Ended          Ended
                                             March 31, 1998 March 31, 1997
                                             ------------   ------------

   Net income                                       $845         $1,060
                                             =============  =============

   Denominator for basic earnings
     per share--weighted
     average shares                               10,406          9,951

   Dilutive employee stock options                   766          1,117
                                             ------------   ------------
   Denominator for diluted earnings
      per share                                   11,172         11,068
                                             =============  =============

   Basic earnings per share                        $0.08          $0.11
                                             =============  =============

   Diluted earnings per share                      $0.08          $0.10
                                             =============  =============


     Net income per share amounts are based on the weighted average number of
common shares and common stock equivalents, where dilutive, outstanding during
the period.  Common stock equivalents arise from outstanding stock options
and are computed using the treasury stock method.  For the quarters ended March
31, 1998 and 1997, options to purchase 522,219 shares and 27,300 shares, 
respectively, of the company's common stock were outstanding at exercise prices
greater than the average market prices of $13.04 and $13.36 for the Company's
common stock during those quarters in 1998 and 1997, respectively.  These
options were not included in the calculation of diluted earnings per share
because the effect would have been antidilutive.

NOTE 4. - Collaboration with Affymetrix, Inc.

In the third quarter of 1994, a consortium led by 
Affymetrix, Inc. and the Company was awarded funding from 
the Advanced Technology Program of the National Institute of 
Standards and Technology (NIST).  The Company and its 
partner, Affymetrix, collaborate with researchers at several 
academic and research institutions in an effort to develop 
miniaturized DNA diagnostic systems. The two companies will 
receive up to $31 million in matching funds to be divided 
33% to the Company and 67% to Affymetrix over the five years 
of the grant beginning in January 1995, for research and 
development in the field of DNA diagnostic devices with a 
total shared project cost of $63 million. Approximately 
$18.3 million of the $31 million was available for the first 
three years of the grant period, which ended in January 
1998. The grant funding will allow the Company to work 
toward developing new fluorescence detection technologies 
and DNA separation devices and apply these to the expanding 
field of molecular genetics. In the first quarter of 1998 
and 1997, the Company recognized credits to its expenses of 
approximately $386,000 and $614,000, respectively, and 
reduced its capitalized software by $79,000 and $125,000, 
respectively, representing support from the grant.

NOTE 5. - Stock Repurchase Program

In May 1994, the Board of Directors authorized the purchase 
of up to 1,000,000 shares of the Company's common stock in 
the open market, and in February 1997 the Board increased 
this amount by 500,000 shares.  The Company has purchased 
approximately 1,000,000 shares under this program as of 
March 31, 1998.  Of these, approximately 1,000,000 shares 
were reissued under the Company's Stock Option and Employee 
Stock Purchase Plans.  None of these shares was reissued 
during the first quarter of 1998.  The Company had purchased 
122,000 additional shares during the period between the end 
of the first quarter of 1998 and May 12, 1998.

NOTE 6. - Technology Access Program

The Company and Amersham Life Science Ltd. are developing 
systems for fluorescence analysis of DNA in microarrays.  
The two companies are pursuing agreements with genomics, 
pharmaceutical and biotechnology companies to provide them 
with microarray systems prior to their release to the 
general market, in exchange for funding and collaborative 
expertise.  From inception in November, 1996, through March 
31, 1998, the Company had entered into 14 such agreements, 
including three in the first quarter of 1998.  Between April 
5, 1998 and May 12, 1998, one additional agreement had been 
signed.  Research and development expenses for the first 
quarter of 1998 and 1997 were reduced by approximately $1.1 
million and an immaterial amount, respectively, from credits 
representing amortization of fees from clients participating 
in the Company's technology access program.  In addition, 
$375,000 of the amortized fees was recorded as revenue, with 
no related cost of revenue, for the three months ended March 
31, 1998.

Under the terms of the agreement between the company and 
Amersham, the Company will retain a certain amount of the 
Initial Profits, as defined by the parties, related to 
certain of the Technology Access Agreements.  All subsequent 
profits will be shared.  As of March 31, 1998, the Company 
had realized a portion of the Initial Profits under this 
agreement.

NOTE 7. - Litigation

On March 13, 1998, Molecular Dynamics, Amersham Pharmacia 
Biotech UK Limited and Amersham Life Science Inc. were 
served with a complaint brought by the Perkin-Elmer 
Corporation, PE Applied Biosystems Division ("Applied 
Biosystems") (1) alleging willful infringement by the 
Company of two United States Patents assigned to Perkin-
Elmer and (2) seeking a declaratory judgment of non-
infringement or invalidity of a United States patent 
exclusively licensed to Amersham Pharmacia Biotech.  
According to the complaint, Applied Biosystems' allegations 
of purported infringement against the Company relate to 
Molecular Dynamics' MegaBACE 1000 DNA sequencing systems and 
FluorImagerr 595 imaging systems.  Applied Biosystems seeks 
injunctive relief, as well as damages regarding the alleged 
infringement, along with attorneys' fees.

On April 16, 1998, Molecular Dynamics filed an answer to the complaint, 
seeking a declaratory judgment of non-infringement and/or 
invalidity of the alleged Applied Biosystems patents.  At 
that time, the Company filed a counterclaim alleging that 
it owns rights under two patents which are infringed by certain Applied
Biosystems sequencing systems. The counterclaim alleges that Applied
Biosystems is making, using, offering for sale or selling DNA sequencers,
including the ABI Prism 377, that infringe the Company's patents. The Company
seeks injunctive relief, as well as damages regarding the alleged infringement,
along with attorneys' fees. The action is currently pending in the Northern 
District of California. Discovery has not begun. No trial date has been set.
Although Management believes that the ultimate disposition of this matter
will not materially affect the financial position, results of operations or
liquidity of the Company, significant legal expenses could be incurred
relative to such lawsuit.

NOTE 8. - New Accounting Standard

In June 1997, the Financial Accounting Standards Board 
issued SFAS No.130 "Reporting Comprehensive Income" which 
is effective for financial statements for periods beginning 
after December 15, 1997, and establishes standards for 
reporting and display of comprehensive income and its 
components in a full set of general purpose financial 
statements.  The Company will make the required reporting of 
comprehensive income in its consolidated financial 
statements for the fiscal year ending December 31, 1998 or, 
if material, in its Quarterly Reports.  Comprehensive income 
for the three months ended March 31, 1998 and 1997 was 
$830,000 and $973,000, respectively.

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

        The following discussion should be read in conjunction 
with the attached condensed consolidated financial 
statements and notes thereto, and with the Company's audited 
financial statements and notes thereto for the fiscal year 
ended December 31, 1997.

        Except for the historical information contained 
herein, the matters discussed in this document are forward-
looking statements that involve certain risks and 
uncertainties, including the risks and uncertainties set 
forth below under "Factors That May Affect Future 
Results".

Results of Operations

Sales and other revenue.  The Company's sales and other 
revenue of $14.1 million in the first quarter of 1998 
represented an increase of 8% from $13.0 million in the 
first quarter of the prior year.  This increase resulted 
primarily from increased sales of the Company's MegaBACE? 
DNA sequencing products and Microarray systems, which were 
introduced in 1997, partially offset by decreases in sales 
of the Company's gel and blot scanning products. The Company 
sells its products in North America, Europe, Japan and 
Australia.  Changes in foreign currency exchange rates had 
the effect of decreasing the Company's sales by $293,000 
between the 1998 and 1997 periods.

Gross margin.  Gross margin for the first quarter of 1998 
was 53.0% compared to 57.4% for the same period in the prior 
year.  The decrease in gross margin was primarily due to 
sales mix, primarily relating to sales of lower-margin 
MegaBACE instruments, which were not introduced until mid-
1997, and pre-production microarray systems.

Research and development.  Research and development expenses 
for the first quarter of 1998 were $1.8 million, which 
represented a 14% decrease from expenses of $2.1 million for 
the first quarter of 1997.  This resulted from the increased 
credits to expense representing recognition of fees from 
clients participating in the Company's program for early 
access to technology for the analysis of DNA in microarrays 
(MTAP), partially offset by a decrease in support recorded 
from the Company's NIST grant.  This decrease, and the 
increase in revenue, resulted in research and development 
expenses decreasing as a percentage of revenue to 12.6% in 
the first quarter of 1998, from 15.9% in the first quarter 
of 1997.  Research and development expenses for the first 
quarter of 1998 and 1997 were reduced by $1.1 million and an 
immaterial amount, respectively, in recognition of fees from 
MTAP clients.  In the first quarter of 1998 and 1997, the 
Company recognized credits to Research and Development 
expenses of approximately $386,000 and $614,000, 
respectively, and reduced its capitalized software by 
$79,000 and $125,000, respectively, representing support 
from the NIST grant.


Sales and marketing.  Sales and marketing expenses for the 
first quarter of 1998 were $3.6 million as compared to $3.2 
million in the first quarter of 1997.  This increase was due 
to increases in headcount within the Company's sales and 
marketing departments, primarily in support of the MegaBACE 
product.  This increase resulted in sales and marketing 
expenses growing as a percentage of revenue to 25.7% in the 
first quarter of 1998 from 24.9% in the first quarter of 
1997.

General and administrative.  General and administrative 
expenses for the first quarter of 1998 were $1.2 million, 
approximately equal to the first quarter of 1997.  Since 
sales and other revenue increased, general and 
administrative expenses decreased as a percentage of 
revenue, to 8.8% in the first quarter of 1998 from 9.0% in 
the first quarter of 1997.

Provision for income taxes.  During the first quarter of 
1998, the Company recorded a tax provision utilizing an 
effective tax rate of 25%, as compared to a rate of 12% for 
the first quarter of 1997.  The increased tax rate is due to 
the complete utilization of federal, state and foreign net 
operating loss carryovers (without regard to amounts 
attributable to the exercise of stock options, for which 
related tax benefits were credited to equity) in 1997.

Earnings per share.    Basic earnings per share were $0.08 
in the first quarter of 1998, compared to $0.11 in the first 
quarter of 1997.  Diluted earnings per share were $0.08 in 
the first quarter of 1998, compared to $0.10 in the first 
quarter of 1997.  This decrease in the current year is 
primarily due to the lower gross margin percentages 
discussed above.

Factors That May Affect Future Results

The Company believes that results of operations in any 
quarterly period may be impacted by factors that have 
occurred in the past, and may occur in the future, such as 
the effect of delays in the shipment of new products, 
increased competition, legal expenses, order deferrals in 
anticipation of new product releases, decisions to invest in 
research and development programs, difficulty in acquiring 
critical product components of acceptable quality and in 
required quantity, Year 2000 issues, a slower growth rate in 
the Company's target markets, or lack of market acceptance 
of new products, the Company's profit-sharing agreements 
with Amersham Pharmacia Biotech, reduction or delay of 
government and private sector funding of research 
activities, or adverse changes in economic conditions in any 
of the countries in which the Company does business.  Also, 
with a significant portion of net sales and net income 
contributed by international operations, fluctuations of the 
U.S. dollar against foreign currencies such as those that 
occurred in the first quarter of 1998 could affect the 
Company's results of operations and financial condition in a 
particular quarter.  There can be no assurance that the 
Company will be able to grow in future periods or continue 
profitability on a quarterly basis.

Due to the factors noted above, the Company's future 
earnings and stock price may be subject to significant 
volatility, particularly on a quarterly basis.  Any 
shortfall in revenues or earnings from levels expected by 
securities analysts could have an immediate and significant 
adverse effect on the trading price of the Company's common 
stock.  The Company typically recognizes a substantial 
portion of sales near the end of a quarter.  Therefore, as 
has happened in the past, the Company may not become aware 
of such shortfalls until late in a quarter, which may result 
in an adverse effect on the trading price of the Company's 
common stock.

Liquidity and Capital Resources

Working capital increased to $35.4 million as of March 31, 
1998, from $34.4 million at December 31, 1997, primarily due 
to the Company's profitable operations.  The issuance of 
stock for employee stock option and purchase plans was the 
source of approximately $650,000 of working capital, and 
approximately $930,000 of working capital was used to fund 
development of capitalized software and to purchase fixed 
assets to expand the Company's facilities.

The Company's principal commitments at March 31, 1998 
consisted of obligations under operating leases for 
facilities and equipment.  Long-term cash requirements, 
other than normal operating expenses, are anticipated for 
development of new products, enhancement of existing 
products, financing continued growth, and possible 
acquisition of products, technologies or businesses 
complementary to the Company's business.  The Company 
believes its cash, securities available-for-sale, and cash 
flows from operating activities will be sufficient to 
satisfy its working capital requirements for the foreseeable 
future.

Year 2000

The Company is reviewing its internal computer systems and 
product offerings to ensure these systems and offerings are 
adequately able to address the issues expected to arise in 
connection with the Year 2000.  These issues include the 
possibility that software which does not have the capacity 
to recognize four digits in a date field may no longer 
function properly when use of that date becomes necessary. 

The Company expects to implement the systems and programming 
changes necessary to address Year 2000 issues on an 
enterprise-wide basis and is currently reviewing the cost of 
such actions.  A significant proportion of these costs are 
not expected to be incremental costs to the Company, but 
will represent redeployment of existing Company resources.  
The Company expects such modifications to its products and 
internal systems will be made on a timely basis, and 
presently believes that, with modifications to existing 
software or converting to new software, the Year 2000 issue 
will not pose significant operational problems for the 
Company's computer systems; however, there can be no 
assurance there will not be a delay in, or increased costs 
associated with, the implementation of such changes, and the 
Company's inability to implement such changes could have an 
adverse effect on future results of operations. 

The Company has not fully determined the extent to which it 
may be impacted by third parties' systems, which may not be 
Year 2000-compliant.  The Year 2000 computer issue creates 
risk for the Company from third parties with whom the 
Company deals on financial transactions worldwide.  While 
the Company has begun efforts to seek reassurance from its 
suppliers and service providers, there can be no assurance 
that the systems of other companies that the Company deals 
with or on which the Company's systems rely will be timely 
converted, or that any such failure to convert by another 
company could not have an adverse effect on the Company.

<PAGE>
PART II.                OTHER INFORMATION



        Item 6: Exhibits and Reports on Form 8-K

                (a)     There were no reports on Form 8-K during 
the quarter ended March 31, 1998.


<PAGE>
MOLECULAR DYNAMICS, INC.


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.



                                                MOLECULAR DYNAMICS, INC.
                                                                (Registrant)


Date:   May 19, 1998                    By: /s/ Jay Flatley     
                                                     Jay  Flatley
                                                        President, Chief 
                                                        Executive Officer &  
                                                        Acting Chief  
                                                        Financial Officer

Date:   May 19, 1998                    By:     /s/Lynne R. Wagoner     
                                                         Lynne R. Wagoner
                                                         Director of 
                                                         Finance (Principal 
                                                         Accounting 
                                                         Officer)