<?xml version="1.0"?>
<ownershipDocument>

    <schemaVersion>X0202</schemaVersion>

    <documentType>4</documentType>

    <periodOfReport>2004-07-09</periodOfReport>

    <issuer>
        <issuerCik>0000853274</issuerCik>
        <issuerName>AMERICAN RETIREMENT VILLAS PROPERTIES III LTD PARTNERSHIP</issuerName>
        <issuerTradingSymbol>N/A</issuerTradingSymbol>
    </issuer>

    <reportingOwner>
        <reportingOwnerId>
            <rptOwnerCik>0000949322</rptOwnerCik>
            <rptOwnerName>ARV ASSISTED LIVING INC</rptOwnerName>
        </reportingOwnerId>
        <reportingOwnerAddress>
            <rptOwnerStreet1>245 FISCHER AVENUE COSTA MESA, CA 92626</rptOwnerStreet1>
            <rptOwnerStreet2></rptOwnerStreet2>
            <rptOwnerCity></rptOwnerCity>
            <rptOwnerState></rptOwnerState>
            <rptOwnerZipCode></rptOwnerZipCode>
            <rptOwnerStateDescription></rptOwnerStateDescription>
        </reportingOwnerAddress>
        <reportingOwnerRelationship>
            <isDirector>1</isDirector>
            <isOfficer>0</isOfficer>
            <isTenPercentOwner>1</isTenPercentOwner>
            <isOther>0</isOther>
            <officerTitle>Managing General Partner</officerTitle>
        </reportingOwnerRelationship>
    </reportingOwner>

    <nonDerivativeTable>
        <nonDerivativeTransaction>
            <securityTitle>
                <value>Limited Partnership Units</value>
                <footnoteId id="F1"/>
            </securityTitle>
            <transactionDate>
                <value>2004-06-24</value>
                <footnoteId id="F2"/>
            </transactionDate>
            <transactionCoding>
                <transactionFormType>4</transactionFormType>
                <transactionCode>P</transactionCode>
                <equitySwapInvolved>0</equitySwapInvolved>
            </transactionCoding>
            <transactionAmounts>
                <transactionShares>
                    <value>4444.393</value>
                </transactionShares>
                <transactionPricePerShare>
                    <value>400.00</value>
                </transactionPricePerShare>
                <transactionAcquiredDisposedCode>
                    <value>A</value>
                </transactionAcquiredDisposedCode>
            </transactionAmounts>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>18666.480</value>
                </sharesOwnedFollowingTransaction>
            </postTransactionAmounts>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>I</value>
                </directOrIndirectOwnership>
                <natureOfOwnership>
                    <value>By ARVP III Acquitsition LLC</value>
                    <footnoteId id="F3"/>
                </natureOfOwnership>
            </ownershipNature>
        </nonDerivativeTransaction>
    </nonDerivativeTable>

    <derivativeTable></derivativeTable>

    <footnotes>
        <footnote id="F1">See Exhibit 99.</footnote>
        <footnote id="F2">The Reporting Person received notice on July 7, 2004 of the filing of a certificate of merger giving effect as of June 24, 2004 to its acquisition of the sercurities reported in item 4 of Table I, as further discussed in Exhibit 99 hereto.</footnote>
        <footnote id="F3">By ARVP III Acquisition LLC, a Delaware limited liability company and wholly owned subsidiary of ARV Assisted Living, Inc.</footnote>
    </footnotes>

    <ownerSignature>
        <signatureName>/s/ MARK JESSEE</signatureName>
        <signatureDate>2004-07-09</signatureDate>
    </ownerSignature>
</ownershipDocument>

