FILED PURSUANT TO RULE 424(b)(3)
                                                          FILE NUMBER: 333-58148

Resale Prospectus


                [LOGO OF PACIFIC AEROSPACE & ELECTRONICS, INC.]

                        4,036,978 Shares of Common Stock


These shares of common stock are being offered and sold from time to time by
four investors holding warrants issued to purchase our common stock.  The
selling shareholders are offering a total of 4,036,978 shares of common stock
that they may receive from time to time upon exercise of warrants that we issued
to them in a private placement.  We will not receive any of the proceeds from
sale of these shares.  See page 19 for the names of the selling shareholders.

The selling shareholders may offer the common stock to the public at fixed
prices, prevailing market prices, formula prices relating to prevailing market
prices, or negotiated prices.

Our common stock is traded on the Nasdaq National Market System under the symbol
"PCTH."  On March 28, 2001, the closing price of our common stock was $.25 per
share.

Our executive offices are located at 430 Olds Station Road, Third Floor,
Wenatchee, Washington  98801, and our telephone number is (509) 667-9600.

Potential investors should consider the risk factors starting on page 3 before
purchasing the shares.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the shares, or determined if this
prospectus is accurate or complete.  Any representation to the contrary is a
criminal offense.

                                 April 6, 2001


                               TABLE OF CONTENTS



Section                                                                 Page
                                                                        ----
                                                                     
Risk Factors.........................................................     3
Our Business.........................................................    14
Recent Developments..................................................    16
Information Incorporated by Reference................................    17
Available Information................................................    18
Selling Shareholders.................................................    19
Plan of Distribution.................................................    20
Experts..............................................................    23
Legal Matters........................................................    24


                             ______________________


Prospective investors may rely only on information contained in this prospectus
or incorporated into it by reference.  Neither Pacific Aerospace & Electronics,
Inc. nor the selling shareholders have authorized any person to provide
prospective investors with any information other than that contained in this
prospectus.

                             ______________________

                                       2


                                  RISK FACTORS
______________________________________________________________________________

An investment in shares of our common stock involves risks.  You should
carefully consider all of the information set forth in this prospectus.  In
particular, you should evaluate the following risk factors before making an
investment in the shares of our common stock.  If any of the following
circumstances actually occur, our business, financial condition and results of
operations could be materially and adversely affected.  If that occurs, the
trading price of our common stock could decline, and you could lose all or part
of your investment.

Some of these risk factors contain forward-looking statements.  These forward-
looking statements are not guarantees of our future performance.  They are
subject to risks and uncertainties related to business operations, some of which
are beyond our control.  Any of these risks or uncertainties may cause actual
results or future circumstances to differ materially from the forward-looking
statements set forth in this section.

______________________________________________________________________________

We have reported net losses for recent periods, and we may continue to incur net
losses, which could jeopardize our operations and decrease our stock value.

We reported a net loss of $12,869,000 for our fiscal year ended May 31, 1999, a
net loss of $13,049,000 for our fiscal year ended May 31, 2000, and a net loss
of $53,512,000, including impairment losses, for the nine months ended February
28, 2001.  We believe that we will continue to incur net losses for the
remainder of fiscal 2001 and that such losses may be substantial.  For our
quarter ended February 28, 2001, we recorded impairment losses related to our
European Aerospace Group goodwill and impairment losses related to other
intangibles and property.  We also wrote off substantially all our deferred
income tax assets at February 28, 2001.  We can offer no assurance that we will
achieve profitable operations or that any profitable operations will be
sustained.  Our ability to achieve a profitable level of operations in the
future will depend on many factors, including our ability to reduce the level of
our debt, to assimilate our recent and potential future acquisitions, to finance
production and to realize acceptable gross profits on the products we sell.
Future profitability will also depend on our ability to develop new products,
the degree of market acceptance of our existing and new products, and the level
of competition in the markets in which we operate.  If we continue to incur net
losses, our cash flow position could be further damaged, our operations could be
jeopardized, and our stock price could decrease.

Our inability to generate cash if and when needed could severely impact our
ability to continue as a going concern.

Our consolidated financial statements have been prepared assuming that we will
continue as a going concern.  However, our independent auditors in their most
recent report stated that Pacific Aerospace has suffered recurring losses from
operations which raise substantial doubt about our ability to continue as a
going concern.  Our consolidated financial statements do not include any
adjustments that might result from the outcome of that uncertainty.  If we are
not sufficiently successful in generating cash from operating activities, we may
need to sell additional common stock or other securities, or we may need to sell
assets outside the ordinary course of business.  If

                                       3


we need to dispose of assets outside of the ordinary course of business to
generate cash, we may not be able to realize the carrying values of those assets
upon liquidation. If we are unable to generate the necessary cash, we could be
unable to continue operations.

We need to raise additional cash or we will not be able to fund our operations
or to make interest payments on our loans when they are due.

Our existing cash and credit facilities will not be sufficient to meet our
obligations as they become due.  Consequently, we will need to obtain additional
cash.  Our actual cash needs will depend primarily on the amount of cash
generated from or used by operations and financing activities.  We cannot
predict accurately the amount or timing of our future cash needs.  Our next
semi-annual interest payment of approximately $3.6 million on our 11 1/4% senior
subordinated notes is due on August 1, 2001.  We did not make our February 1,
2001 interest payment on those notes until March 2, 2001, which was one day
before expiration of the 30-day grace period to make that payment before an
event of default would have occurred.  We made the interest payment from the
proceeds of an approximately $13.8 million senior secured loan that closed on
March 1, 2001.  The March 1, 2001 loan bears interest at 18% per annum, payable
quarterly.  The first interest payment was due on March 31, 2001, and we paid it
on time.  We have the option to defer and accrue a portion of the quarterly
interest, up to 1 1/4% per quarter, for up to a year at the time of any interest
payment.  We do not currently have sufficient cash to make the August 1, 2001
interest payment on our 11 1/4% senior subordinated notes, and we will need to
raise additional cash to make that payment.  We also need to raise additional
cash to make future interest payments on our 18% senior secured loan and to fund
our operations.  If we are unable to obtain sufficient cash when needed to fund
our operations, to make these interest payments, and to pay our other
obligations when due, we may be forced to seek protection from creditors under
the bankruptcy laws.

We do not have revolving lines of credit that would help us fund our operations.

Our U.S. operating line of credit expired on September 5, 2000, and was extended
through March 5, 2001.  Due to our continued losses, our U.S. senior lender
decided not to renew our revolving line of credit and we repaid that line of
credit in full on March 2, 2001, out of the proceeds of our 18% senior secured
loan.  Our line of credit in the U.K. expired in November 2000.  That line of
credit was subsequently extended, and we repaid it in full on March 7, 2001.  We
do not plan to request renewal of that line.  Our senior secured loan is a term
loan rather than a revolving loan.  As a result, if we make payments of
principal before the loan's maturity, additional loan proceeds will not become
available, and the loan will not provide an additional source of cash to fund
our operations or to meet our obligations as they become due.

We have significant debt that adversely affects our financial condition.

At February 28, 2001, our total long-term debt was approximately $79.6 million,
or approximately 83% of our total assets.  At February 28, 2001, we had a total
stockholders' deficit of $4.2 million. Unless we increase our cash flow from
operations, our total stockholders' deficit, coupled with continued losses,
indicates that we will have difficulty satisfying our debt obligations in the
future. We incurred substantial debt and payment obligations to finance the
                                       4


acquisition of our European Aerospace Group, which was formed when we acquired
Aeromet International PLC in 1998. This debt, which consists of our senior
subordinated notes, currently constitutes $63.7 million of our long-term debt
and bears interest at 11.25% per year. In addition, at February 28, 2001, our
balance sheet includes approximately $3.3 million of deferred financing costs,
which are being charged off to interest expense over the period that the related
debt is expected to be outstanding. We recently announced our intention to sell
our European Aerospace Group in order to reduce our outstanding 11 1/4% senior
subordinated notes. We do not yet know whether we can sell Aeromet or, if it is
sold, the amount of net proceeds that will be available to reduce our debt. In
addition to our outstanding 11 1/4% senior subordinated notes, we have
approximately $13.8 million in senior secured debt that bears interest at 18%
per annum. Our debt could make us unable to obtain additional financing in the
future. It could also divert a significant portion of our cash flow to principal
and interest payments and away from operations and necessary capital
expenditures. Our debt has significantly increased our interest expense and net
loss, and we expect the interest expense to continue to increase our net loss
for the foreseeable future. Our debt also puts us at a competitive disadvantage
in relation to competitors with less debt and limits our flexibility to adjust
to downturns in our business or market conditions.

If we are not able to pay our debt, our lenders could accelerate the principal
owing on our debt, which we do not have the funds to pay.

If we do not generate sufficient cash flow to make our debt payments, we could
be forced to reduce or delay capital expenditures or to dispose of material
assets or operations, potentially at a substantial loss.  If we were unable to
pay our debt, we might need to restructure or refinance our debt at potentially
higher rates of interest.  Alternatively, we might need to seek additional
equity capital, which would dilute the value of the shares held by our existing
shareholders.  We may not be able to do any of these things, or we may not be
able to do them on satisfactory terms.  If we failed to make our debt payments,
the lenders would be able to declare all amounts we owe to be immediately due
and payable.  If this were to occur, we would not have funds available to us to
pay off the debt.  In addition, if we could not repay our secured debt, secured
lenders could proceed against any collateral securing that debt.  The collateral
for our secured debt consists of substantially all of our assets, including
receivables, inventories, real property, personal property, intangible assets,
and the stock of all of our operating subsidiaries.  If we are unable to pay our
debt or other obligations, we may be forced to seek protection from creditors
under the bankruptcy laws.

We must comply with a number of significant debt covenants that limit our
flexibility.

The agreements that govern our debt, particularly the indenture that governs our
11 1/4% senior subordinated notes and the loan agreement that relates to our
senior 18% secured notes, restrict a number of our activities.  Unless we obtain
consent from our lenders, we cannot dispose of or create liens on assets or
create additional indebtedness.  We are not permitted to pay dividends to
shareholders or repurchase stock.  Our debt covenants restrict our ability to
acquire new businesses or make investments or loans to others.  We are also
subject to covenants that limit our ability to make capital expenditures, change
the business we conduct, or engage in transactions with related parties.  In
addition, if there is a change of control of our company, we

                                       5


may be required to repay our debt early. If we breach any of these covenants,
the lenders may be able to declare all amounts we owe to be immediately due and
payable. If this were to occur, we would likely not have funds available to us
to pay off the debt, and our secured lenders would be entitled to proceed
against any collateral securing their debt.

Our common stock may be delisted from the Nasdaq National Market, which could
make it more difficult to buy or sell our common stock, and which would result
in our obligation to issue a substantial number of additional shares to the
selling shareholders.

Our common stock is currently quoted on the Nasdaq National Market.  In order to
remain listed on this market, we must meet Nasdaq's listing maintenance
standards. If we were unable to meet Nasdaq's standards for any other reason,
our common stock could be delisted from the Nasdaq National Market System.

On March 22, 2001, we received a determination letter from Nasdaq indicating
that, absent a successful appeal by the Company, our common stock would be
removed from listing on the Nasdaq National Market.  The determination was based
on the failure of our common stock to comply with Nasdaq Marketplace Rule
4450(a)(5), which requires listed stock to maintain a minimum bid price of
$1.00.  Our common stock has traded below $1.00 since November 7, 2000.

We requested an oral hearing before a Nasdaq Listing Qualifications Panel to
appeal the staff's determination to delist us, and that hearing has been set for
May 11, 2001.  Although there can be no assurance that the panel will grant our
request for continued listing, we will have the opportunity to present arguments
at the hearing.  Nasdaq has advised us that, pending completion of the panel
appeal process, our common stock will continue to be listed on the Nasdaq
National Market.  We must demonstrate our ability to regain compliance with the
minimum bid price requirement, as well as demonstrate our ability to sustain
long-term compliance with all applicable continued listing requirements.  We do
not currently know how long the appeal process will last. Consequently, we
cannot currently predict when our common stock will be delisted if our appeal is
unsuccessful.

We also received a letter from Nasdaq on December 6, 2000, raising concerns
about whether we would be able to sustain compliance with the continued listing
requirements of the Nasdaq Stock Market as a result of the "going concern"
warning that we received from our independent auditors in their last audit
report.  Nasdaq requested that we provide it with certain information addressing
its concerns.  We responded to that request in a timely manner, and we have not
received further correspondence from Nasdaq regarding our response.

If our common stock were delisted, it would trade on the electronic bulletin
board, rather than on either the Nasdaq National Market or Small Cap Market, and
the liquidity for our common stock would be adversely affected.

                                       6


We may not be successful if we fail to manage our growth.

We have experienced rapid growth from both operations and acquisitions.  This
growth has placed and will continue to place significant demands on our
managerial, administrative, financial and operational resources.  For example,
both our total number of employees and the number of our operating sites nearly
doubled as a result of acquiring our European Aerospace Group, which was formed
when we acquired Aeromet in July 1998.  The size of our European Aerospace Group
has caused and will continue to cause it to have a significant impact on our
future financial results.  We need to be increasingly diligent in our business
decisions.  To manage our growth effectively, we must continue to improve our
operational, accounting, financial and other management processes and systems.
Our U.S. operating divisions have had different accounting systems, which we
have integrated or are in the process of integrating.  We must also continue to
attract and retain highly skilled management and technical personnel.  If we do
not effectively manage these aspects of our growth, we may not succeed.

Our past and possible future acquisition strategy could negatively impact our
performance.

We have historically pursued an aggressive acquisition strategy.  Although we
are currently focusing substantially all of our attention on existing operations
and on internal growth, we expect that in the future we may evaluate and pursue
potential strategic acquisitions.  We have incurred substantial losses as a
result of some of our acquisitions and investments, including approximately
$33.3 million during the nine months ended February 28, 2001, approximately $4.6
million in fiscal 2000, and approximately $12.7 million in fiscal 1999.  We need
to better manage our acquisition strategy.  This includes accurately assessing
the value, strengths and weaknesses of acquisition candidates, as well as
successfully implementing necessary changes at newly acquired subsidiaries.  In
the past, our aggressive acquisition strategy has diverted management attention
from our operations, increased borrowings, disrupted product development cycles
and diluted earnings per share.  If we do not successfully manage future
acquisitions, if any, our financial performance could continue to be negatively
impacted by acquisitions.

We have experienced asset impairment and may experience additional asset
impairment in the future.

We review long-lived assets and intangibles for potential impairment of value
whenever events or changes in circumstances indicate that the carrying amount of
those assets may not be recoverable.  An impairment is determined by totaling
the estimated net future cash flows derived from the asset and comparing that
total to the book value of the asset.  When the total of the net future cash
flows is lower than the book value, an impairment exists.  The amount of the
impairment is the difference between the present value of the net future cash
flows and the book value of the asset.  During the fourth quarter of fiscal
2000, due to continuing losses and continued weakness in our business related to
changes in the commercial aerospace and transportation industries, our
evaluation resulted in the realization of a $4.6 million impairment of goodwill
and a $600,000 property impairment related to our U.S. Aerospace Group.  We will
continue to evaluate our assets, especially in our aerospace groups, on a
quarterly basis until such time as our divisions become consistently profitable.
Our future evaluations could result in additional impairment charges, primarily
for goodwill and for property and equipment.  These

                                       7


possible impairment charges could be material, as our balance sheet at February
28, 2001 includes approximately $9 million of goodwill and $34 million of
property, plant and equipment. Our European Aerospace Group is currently being
offered for sale. Although at this time we have not committed to a specific
buyer of the group, we have received several bona-fide preliminary indicative
offers to purchase the group. If these preliminary offers approximate the final
negotiated sales price for the group, the preliminary offers indicate that we
have incurred an impairment loss related to goodwill of approximately $25
million. Consequently, for the quarter ended February 28, 2001, we recorded an
impairment loss in that amount related to our European Aerospace Group goodwill
as well as impairment losses related to other intangibles and property, for a
total of approximately $32 million.

We recently concluded that our deferred income tax assets were not sufficiently
likely to be realized and needed to be written off.

We review deferred income tax assets for realizability of value quarterly. As a
result of continued losses, we have concluded that deferred income tax assets do
not meet the accounting requirement of "more likely than not" to be realized and
we wrote off $4.8 million of deferred tax assets as of February 28, 2001,
resulting in an increase in deferred income tax expense and net loss.

Our European Aerospace Group has had and will continue to have a significant
impact on our business.

The acquisition of our European Aerospace Group in 1998 doubled the size of our
company.  At May 31, 2000, approximately 50% of our assets and approximately 45%
of our revenues were associated with our operations in the United Kingdom.  It
is more difficult for us to manage a business in the United Kingdom than our
other businesses, which are located in Washington State.  The reasons for the
increased difficulty include differences in time, distance, business practices
and cultural variations.  Our ownership of a business in Europe also subjects us
to regulatory, tax, and trade restrictions that we did not previously face.  If
we retain ownership of our European Aerospace Group and do not effectively
manage that group, we may not be successful.

Changes in foreign currency exchange rates could negatively affect our financial
position.

Because of our European Aerospace Group, we may decide to engage in hedging
transactions to protect against losses caused by changes in the exchange rate
between the U.S. dollar and the British pound sterling.  However, we have not
engaged in hedging transactions to date.  Since approximately 50% of our
transactions are conducted in foreign currency, the exchange rate risk could be
material.  For the nine months ended February 28, 2001, we incurred a foreign
currency translation loss of approximately $23 million.  Even if we were to
engage in hedging transactions, they may not completely offset any such losses.
Our European Aerospace Group has a few contracts that are in European currencies
other than British pounds sterling, or in U.S. dollars.  We believe that the
conversion of European currencies to the Euro will not have a material adverse
effect on the European Aerospace Group's business or financial condition.

                                       8


Future issuances or resales of a significant number of shares of our common
stock could negatively affect the market price of our stock.

Sales of a significant number of shares of common stock in the public market or
the prospect of such sales could adversely affect the market price of our common
stock.  This offering covers the resale by the selling shareholders of up to
4,036,978 shares of common stock.  As of March 28, 2001, we have also reserved
2,295,000 common shares for issuance under our publicly traded warrants with an
exercise price of $4.6875 per share, 3,387,948 common shares for issuance under
options outstanding under our two stock incentive plans, with exercise prices
ranging from $.4375 to $4.687 per share, 129,137 common shares for issuance
under options outstanding under our independent director stock plan, with
exercise prices ranging from $.9219 to $1.90 per share, and 1,302,759 common
shares for issuance under other warrants, with exercise prices ranging from
$1.7688 to $9.50 per share.  We have an obligation to issue warrants to purchase
up to 692,074 shares of common stock at an exercise price of $.4062 to the
placement agent in connection with our March 1, 2001 18% senior secured loan.
We also have an employee stock purchase plan permitting employees to purchase
shares of common stock using payroll deductions.  Shares issued upon exercise of
our outstanding warrants or options or pursuant to the employee stock purchase
plan would be available for resale in the public markets, subject in some cases
to volume and other limitations and subject, in some cases to the filing and
effectiveness of registration statements that we are obligated to file.  Any
future issuance of a significant number of common shares, or any future resales
by the holders of a significant number of common shares, or the prospect of such
issuances or resales, could negatively affect the market price of our common
stock.

We depend on some significant customers continuing to purchase our products, and
our revenues will decline significantly if we cannot keep or replace these
customers.

We do not have long-term contracts with most of our major customers, and our
long-term contracts generally permit the customer to cancel their orders. We
depend on our customers continuing to place orders for our products.  Our top
ten customers in terms of revenues during fiscal 2000 together accounted for
approximately 46% of our revenues for that year, and no other customer accounted
for more than 2% of our revenues.  Only the top four customers individually
accounted for 5% or more of our revenues, with The Boeing Company at
approximately 10%, Rolls-Royce plc at approximately 7%, PACCAR, Inc. at
approximately 6%, and Aeronautical Macchi Manufacturing Corporation (Aermacchi)
at approximately 5%.  We produce machined and cast metal aircraft components for
Boeing, Rolls-Royce and Aermacchi, and cast metal heavy trucking components for
PACCAR.  Because of the relatively small number of customers for most of our
products, our largest customers can influence product pricing and other terms of
trade.  If we were to lose any of our largest customers, or if they reduced or
canceled orders, our business and financial performance could be harmed.


We operate in industries that are subject to cyclical downturns that could
adversely affect our revenues.

We operate in historically cyclical industries.  The aerospace, defense and
transportation industries are sensitive to general economic conditions, and past
recessions have adversely

                                       9


affected these industries. In past years, a number of factors have adversely
affected the aerospace industry, including increased fuel and labor costs, and
intense price competition. Recently, the commercial aircraft industry
experienced a downturn in the rate of its growth due to changing economic
conditions and as a result of the ongoing financial crisis in Asia, which caused
reductions in production rates for some commercial airline programs. The major
aircraft manufacturers responded, in part, by significantly decreasing their
inventory levels. Although very recently the aerospace industry seems to have
been experiencing better results, we have not yet benefited from the
improvements. Additional cancellations or delays in aircraft orders from
customers of Boeing or Airbus could reduce demand for our products and could
have a material adverse effect on our business and financial performance.
Cyclical factors and general economic conditions could lead to a downturn in
demand for our core products and decrease our revenues.

We may fail to retain our key management and technical personnel, which could
negatively affect our business.

We believe that our ability to successfully implement our business strategy and
to operate profitably depends significantly on the continued employment of our
senior management team, led by our president, Donald A. Wright, and our ability
to retain and hire engineers and technical personnel with experience in the
aerospace and electronics industries.  We have key man life insurance policies
on the life of Mr. Wright totaling $8 million.  We also have an employment
agreement with Mr. Wright and several other senior managers.  However, our
business and financial results could be materially adversely affected if Mr.
Wright, other members of the senior management team, or significant engineers or
technical personnel become unable or unwilling to continue in their present
employment.  Our growth and future success will depend in large part on our
ability to retain and attract additional board members, senior managers and
highly skilled technical personnel with experience in the aerospace and
electronics industries.  Because our U.S. operations are not located in a large
metropolitan area, we may face more difficulty in acquiring and retaining key
management and technical personnel than our competitors in major cities.
Competition for such individuals is intense, and we may not be successful in
attracting and retaining them, which could interfere with our ability to manage
our business profitably.

We may not be able to convert all of our backlog into revenue.

We sell the majority of our products through individual purchase orders.  Many
of our customers would have the right to terminate orders by paying the cost of
work in process plus a related profit factor.  Historically, we have not
experienced a large number of significant order cancellations.  However, from
time to time, customers cancel orders as a result of a program being cancelled
or for other reasons.  As of May 31, 2000, we had purchase orders and
contractual arrangements evidencing anticipated future deliveries, which we
treat as backlog, through fiscal year 2002 of approximately $80 million.  We
expect to deliver approximately $70 million of this backlog in fiscal year 2001.
We may not be able to complete all of that backlog and book it as net sales, if
we experience cancellations of pending contracts or terminations or reductions
of contracts in progress.

                                       10


If we do not adapt to technological change and develop new products, we could
lose customers and our revenues could decline.

The market for our products in both the aerospace and the electronics industries
is characterized by evolving technology and industry standards, changes in
customer needs, adaptation of products to customer needs, and new product
introductions.  Other companies that manufacture components for the aerospace
and electronics industries from time to time may announce new products,
enhancements, or technologies that have the potential to replace or render our
existing products obsolete.  Our success will depend on our ability to enhance
our current products and develop new products to meet changing customer needs,
and achieve market acceptance of those products.  We view our proprietary
technology and our level of technological development as our primary strengths.
Because most of our research and development efforts are funded by customers, it
will be essential for us to continue to respond effectively to our customers'
needs.  We will also need to anticipate or respond to evolving industry
standards and other technological changes on a timely and cost-effective basis.
If we do not adequately respond to these changes, we could lose customers and
our revenues could decline.

Our markets are highly competitive, and our competitors' strengths may prevent
us from executing our business strategy.

We have substantial competition in many of the markets that we serve.  In the
electronics markets, our competitors are generally larger than we are.  In the
aerospace market, we compete with both regional machine shops and forming
business and offshore foundries, which tend to have lower costs.  Many of these
competitors have greater financial resources, broader experience, better name
recognition and more substantial marketing operations than we have, and they
represent substantial long-term competition for us.  We believe that our
manufacturing processes, proprietary technologies and experience provide
significant advantages to our customers.  These advantages include high quality,
more complete solutions, competitive prices, and physical properties that meet
stringent demands.  However, competitors can use alternative forms of
manufacturing to produce many of the components and products that we make.
These competing products could be of the same or better quality and price as
those we produce.  We expect our competitors to continue making new
developments, and they could develop products that customers view as more
effective or more economical than our products.  In addition, our competitors
may introduce automation processes and robotics systems that could lower their
costs of production substantially.  If we are not able to compete successfully
against current and future competitors, and respond appropriately to changes in
industry standards, our business could be seriously harmed.

If we cannot obtain raw materials when needed and at a reasonable cost, we could
have difficulty producing cost-effective products and delivering them on time.

Our European Aerospace Group obtains approximately 70% of its titanium from one
supplier and is subject to a lead time of approximately 65 weeks in ordering and
obtaining titanium.  While the European Aerospace Group generally has managed
the ordering process to obtain titanium when needed, a labor strike at the
supplier negatively affected the group's ability to obtain timely

                                       11


deliveries of titanium during fiscal 1999 and into the 2000 fiscal year.
Although the shortage of titanium did not have a material adverse effect on our
European Aerospace Group's business or on our overall financial condition, we
lost some business due to customers' dual sourcing contracts, and some customer
orders that were expected to be delivered in fiscal 1999 were delayed into
fiscal 2000 and 2001. The effect of the strike emphasizes the fact that a
failure to obtain titanium or other raw materials when we need them, or
significant cost increases imposed by suppliers of raw materials such as
titanium or aluminum, could damage our business and financial performance. We
generally have readily available sources of all raw materials and supplies we
need to manufacture our products and, where possible, we maintain alternate
sources of supply. However, we do not have fixed price contracts or arrangements
for all of the raw materials and other supplies we purchase. We have experienced
in the past shortages of, or price increases for, raw materials and supplies,
and shortages or price increases may occur again in the future. Our current cash
shortage has resulted in our deliberate efforts to reduce inventories. Reduced
inventories could result in even greater raw material shortages in the future.
Future shortages or price fluctuations could have a material adverse effect on
our ability to manufacture and sell our products in a timely and cost-effective
manner.

We need to protect our intellectual property and proprietary rights, and
protection may be costly and not always available.

Significant aspects of our business depend on proprietary processes, know-how
and other technology that are not subject to patent protection.  We rely on a
combination of trade secret, copyright and trademark laws, confidentiality
procedures, and other intellectual property protection to protect our
proprietary technology.  However, our competitors may still develop or utilize
technology that is the same as or similar to our proprietary technology.

We have 30 U.S. patents, 6 U.S. patent applications pending (including 3 allowed
applications), 1 PCT International patent applications pending, 7 patent
applications pending in non-U.S. jurisdictions, and 1 European patent
enforceable in the U.K.  We can provide no assurance that any of the patent
applications will result in issued patents, that existing patents or any future
patents will give us any competitive advantages for our products or technology,
or that, if challenged, these patents will be held valid and enforceable.  Most
of our issued patents expire at various times over the next 15 years, with 13
patents expiring over the next four years.  These 13 patents, as well as six
other patents that recently expired, relate to products manufactured by our U.S.
Electronics Group and constituted approximately 0.9% of our consolidated revenue
in fiscal 2000.  Although we believe that the manufacturing processes of much of
our patented technology are sufficiently complex that competing products made
with the same technology are unlikely, our competitors may be able to design
competing products using the same or similar technology after these patents have
expired.

Despite the precautions we have taken, unauthorized parties may attempt to copy
aspects of our products or obtain and use information that we regard as
proprietary.  Existing intellectual property laws give only limited protection
with respect to such actions, and policing violations of these laws is
difficult.  The laws of other countries in which our products are or may be
distributed do not protect products and intellectual property rights to the same
extent as do the

                                       12


laws of the United States. We could be required to enter into costly litigation
to enforce our intellectual property rights or to defend infringement claims by
others. Infringement claims could require us to license the intellectual
property rights of third parties, but licenses may not be available on
reasonable terms, or at all.

We could be subject to product liability claims and lawsuits for harm caused by
our products.

Many of our customers use our products for applications such as aircraft,
satellites, heavy trucks and other uses in which failure could have serious
consequences.  We maintain product liability insurance with a maximum coverage
of $2 million.  However, this insurance may not be sufficient to cover any
claims that may arise.  A successful product liability claim in excess of our
insurance coverage could have a material adverse effect on our business and
financial performance.

We must comply with environmental laws, and any failure to do so could subject
us to claims or regulatory action.

Our facilities are subject to regulations concerning solid waste disposal,
hazardous materials generation, storage, use and disposal, air emissions, waste
water discharge, employee health and other environmental matters.  A number of
the metals, chemicals and other materials used in and resulting from our
manufacturing processes are classified as hazardous substances and hazardous
wastes.  If we do not meet permitting and other requirements of applicable
environmental laws, we could be liable for damages and for the costs of remedial
actions.  We could also be subject to fines or other penalties, including
revocation of permits needed to conduct our business.  Any permit revocation
could require us to cease or limit production at one or more of our facilities,
which could damage our business and financial performance.  We have an ongoing
program of monitoring and addressing environmental matters, and from time to
time in the ordinary course of business we are required to address minor issues
of noncompliance at our operating sites. From time to time, we identify
operations or processes that lack required permits or otherwise are not in full
compliance with applicable environmental laws.  Although we believe these items
have not been material to date, we maintain an environmental compliance team,
and our policy is to take steps promptly to remedy any noncompliance.

We have a policy of obtaining environmental assessment reports in connection
with the acquisition of properties at which we believe historical operations
could have caused adverse environmental conditions.  We are not aware of any
historical contamination on our properties or involving neighboring activities,
except that we currently lease property in Tacoma, Washington that is located
within a superfund site that has been the subject of regulatory action for
several years.  We have not been named as a potentially liable party for
contamination associated with this superfund site, and we have no reason to
believe that we will be so named.

Environmental laws could become more stringent over time, imposing greater
compliance costs and increasing risks and penalties associated with any
violations.  As a generator of hazardous materials, we are subject to financial
exposure with regard to our properties even if we fully

                                       13


comply with these laws. In addition, we utilize facilities that are located in
industrial areas and have lengthy operating histories. As a consequence, it is
possible that historical or neighboring activities have affected properties we
currently own, and that, as a result, additional environmental issues may arise
in the future, the precise nature of which we cannot now predict. Any present or
future noncompliance with environmental laws or future discovery of
contamination could have a material adverse effect on our results of operations
or financial condition.

As a U.S. Government contractor or subcontractor, if we do not comply with
federal laws and regulations we could lose those contracts and incur penalties.

We manufacture some of our products under contracts with the United States
government.  We manufacture other products under contracts with private third
parties who utilize our products to satisfy United States government contracts
to which they are a party.  Federal acquisition regulations and other federal
regulations govern these relationships.  Some of these regulations relate
specifically to the seller-purchaser relationship with the government, such as
the bidding and pricing rules.  Under regulations of this type, we must observe
pricing restrictions, produce and maintain detailed accounting data, and meet
various other requirements.  Other regulations relate to the conduct of our
business generally, such as regulations and standards established by the
Occupational Safety and Health Act or similar state laws and relating to
employee health and safety.  In particular, regulations governing these
contracts require that we comply with federal laws and regulations, in general,
or face civil liability, cancellation or suspension of existing contracts, or
ineligibility for future contracts or subcontracts funded in whole or in part
with federal funds.  In addition, loss of governmental certification (that we
are eligible for government contracted work) could cause some of our customers,
including customers in the defense industry, to reduce or curtail their
purchases from us, which could harm our business.

We have not identified any noncompliance with federal regulations affecting
these government contracts that would be material.  We have identified
conditions that require attention or action.  For example, as part of our
environmental compliance team efforts discussed in the previous section, we
determined that our written policies and training programs relating to employee
health and safety matters at several of our facilities required updating and
revision to ensure consistency among our United States subsidiaries and
compliance with applicable regulations.  We are currently updating and
implementing these written policies and training programs.  These actions are
being taken to ensure compliance with applicable laws, and not in response to
any violations identified by regulatory agencies.

                                  OUR BUSINESS

Pacific Aerospace is an engineering and manufacturing company with operations in
the United States and the United Kingdom. We design, manufacture and sell
components and subassemblies used in technically demanding environments.
Products that we produce primarily for the aerospace and transportation
industries include machined, cast, and formed metal parts and subassemblies,
using aluminum, titanium, magnesium, and other metals. Products that we produce
primarily for the defense, electronics, telecommunications and medical
industries

                                       14


include components such as hermetically sealed electrical connectors
and instrument packages, and ceramic capacitors, filters and feedthroughs. Our
customers include global leaders in all of these industries. We are organized
into three operational groups: U.S. Aerospace, U.S. Electronics, and European
Aerospace.

For our fiscal year ended May 31, 2000, we had net sales of approximately $113
million, with the European Aerospace Group contributing approximately $57
million in net sales.  On October 31, 2000, we announced our intention to sell
our European Aerospace Group in order to reduce our outstanding 11 1/4% senior
subordinated notes.  As of May 31, 2000, we had approximately $64 million in
principal amount of 11 1/4% senior subordinated notes outstanding.  Because we
are in the process of seeking buyers for our European Aerospace Group, we do not
know whether we will be successful in selling that group and, if successful, we
do not know the amount of net proceeds that would be available to reduce our 11
1/4% senior subordinated notes or our approximately $13.8 million of 18% senior
secured notes.  We are required to pay our senior secured lenders at least $7.5
million upon the sale of our European Aerospace Group.  If, at such time as we
have committed to a formal plan of disposition of the European Aerospace Group,
any impairment of the assets of that group can be reasonably determined, we will
record any such impairment loss in our consolidated financial statements.
Although at this time we have not committed to a specific buyer of the group, we
have received several bona-fide preliminary indicative offers to purchase the
group. If these preliminary offers approximate the final negotiated sales price
for the group, the preliminary offers indicate that we have incurred an
impairment loss related to goodwill of approximately $25 million. Consequently,
for the quarter ended February 28, 2001, we recorded an impairment loss in that
amount related to our European Aerospace Group goodwill, as well as impairment
losses related to other intangibles and property, for a total of approximately
$32 million.

                                       15


                              RECENT DEVELOPMENTS

18% Senior Secured Loan

On March 1, 2001, we borrowed approximately $13.8 million from four
institutional lenders.  The loan bears interest at 18% per annum, payable
quarterly, and has a two-year term.  We have the right to defer and accrue a
portion of the interest on the loan, up to 1 1/4% per quarter, for up to a year
at the time of any interest payment.  The loan is secured by our assets, the
assets of our United States subsidiaries, and other intangibles.  We have used
approximately $9.5 million of the proceeds from the loan to repay our revolving
line of credit in the U.S. and to pay the interest payment on our 11 1/4% senior
subordinated notes that was due on February 1, 2001.  The remaining portion of
the proceeds from the secured loans has been or will be used to repay other
indebtedness, to pay the costs related to the loan transaction, and for general
corporate purposes.  In connection with the secured loan, we issued warrants to
purchase an aggregate of 4,036,978 shares of our common stock at an exercise
price of $.001 per share to the lenders. The value of these warrants using the
Black Scholes valuation model is $1.6 million at March 1, 2001, and will be
amortized over the loan term as interest expense, using the straight line method
of amortization. This prospectus relates to the resale of the foregoing shares
issuable to our senior secured lenders. In addition, we paid a commission of
approximately $415,000 to the placement agent that represented us in the
transaction, and we also have an obligation to issue warrants to purchase up to
692,074 shares of our common stock to the placement agent, at an exercise price
of $.4062 per share.

Nasdaq

On March 22, 2001 the we received a determination letter from Nasdaq indicating
that, absent a successful appeal by the Company, our common stock would be
removed from listing on the Nasdaq National Market.  The determination was based
on the failure of our common stock to comply with Nasdaq Marketplace Rule
4450(a)(5), which requires listed stock to maintain a minimum bid price of
$1.00.  Our common stock has traded below $1.00 since November 7, 2000.

We requested an oral hearing before a Nasdaq Listing Qualifications Panel to
appeal the staff determination, and that hearing has been set for May 11, 2001.
Although there can be no assurance that the panel will grant our request for
continued listing, we will have the opportunity to present arguments at the
hearing.  We must demonstrate our ability to regain compliance with the minimum
bid price requirement, as well as demonstrate our ability to sustain long-term
compliance with all applicable continued listing requirements.  Nasdaq has
advised us that, pending completion of the panel appeal process, our common
stock will continue to be listed on the Nasdaq National Market.  We do not
currently know how long the appeal process will last. Consequently, we cannot
currently predict when our common stock will be delisted if our appeal is
unsuccessful.

Restructuring of Operations

On March 30, 2001, we announced that we are putting in place a plan to
restructure our operations.  In connection with the plan, our European Aerospace
Group is for sale, and we recently closed an unprofitable foundry in Tacoma,
Washington.  We are also in the process of

                                       16


downsizing our U.S. Aerospace Group's Engineering & Fabrication Division by
closing our fabrication facilities in Sedro-Woolley, Washington and selling
assets related to the fabrication business. The downsizing of the fabrication
operations began in March 2001, and we expect to complete it by Summer 2001. We
will continue to strengthen and support our core electronics, engineering and
aerospace machining operations.

                     INFORMATION INCORPORATED BY REFERENCE

The SEC allows us to incorporate by reference publicly-filed documents into this
prospectus, which means that information included in those documents is
considered part of this prospectus. Information that we file with the SEC after
the date of this prospectus will automatically update and supersede this
information.  We incorporate by reference the documents listed below and any
future filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until the selling shareholders have sold all the
shares.

The following documents filed with the SEC are incorporated by reference in this
prospectus:

     1.   Our annual report on Form 10-K for the year ended May 31, 2000, filed
          on August 28, 2000, our first amended annual report on Form 10-K/A
          filed on October 13, 2000, our second amended annual report on Form
          10-K/A filed on January 18, 2001, and our third amended annual report
          on Form 10-K/A filed on January 31, 2001;

     2.   Our amended current report on Form 8-K/A filed on July 13, 2000, and
          our second amended current report on Form 8-K/A filed on January 17,
          2001;

     3.   Our current report on Form 8-K filed on August 8, 2000;

     4.   Our definitive proxy statement filed on September 7, 2000;

     5.   Our quarterly report on Form 10-Q for the quarter ended August 31,
          2000, filed on October 12, 2000, and our amended quarterly report on
          Form 10-Q/A filed on January 18, 2001;

     6.   Our quarterly report on Form 10-Q for the quarter ended November 30,
          2000, filed on January 12, 2001, and our amended quarterly report on
          Form 10-Q/A filed on January 31, 2001;

     7.   Our amended quarterly report on Form 10-Q/A for the quarter ended
          February 29, 2000, filed on January 26, 2001;

     8.   Our current report on Form 8-K filed on February 9, 2001;

     9.   Our current report on Form 8-K filed on February 21, 2001;

                                       17


    10.   Our current report on Form 8-K filed on March 7, 2001;

    11.   Our current report on form 8-K filed on March 26, 2001;

    12.   Our current report on Form 8-K filed on April 2, 2001; and

    13.   The description of our common stock set forth in our registration
          statement on Form 8-B as filed with the SEC on February 6, 1997.

You may request free copies of these filings by writing or telephoning us at the
following address: Pacific Aerospace & Electronics, Inc., 430 Olds Station Road,
Third Floor, Wenatchee, Washington 98801, Attention: Mr. Tom Barrows, Investor
Relations, (509) 667-9600.

The information relating to Pacific Aerospace contained in this prospectus is
not comprehensive, and you should read it together with the information
contained in the incorporated documents.

                             AVAILABLE INFORMATION

This prospectus is part of a registration statement that we filed with the SEC.
Certain information in the registration statement has been omitted from this
prospectus in accordance with SEC rules.

We file annual, quarterly and special reports and other information with the
SEC.  You may read and copy the registration statement and any other document
that we file at the SEC's public reference rooms located at Room 1024, Judiciary
Plaza, 450 Fifth Street N.W., Washington, D.C. 20549; 7 World Trade Center,
Suite 1300, New York, New York 10048;  and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661.  Please call the SEC at 1-800-SEC-
0330 for further information on the public reference rooms. Our SEC filings are
also available to you free of charge at the SEC's web site at
http://www.sec.gov.

Statements contained in this prospectus as to the contents of any contract or
other document referred to are not necessarily complete, and in each instance
you should refer to the copy of the contract or other document filed as an
exhibit to the registration statement.

                                       18


                              SELLING SHAREHOLDERS

Shares Offered by the Selling Shareholders.  The selling shareholders identified
in the prospectus are offering up to an aggregate of 4,036,978 shares of common
stock pursuant to this prospectus.  These shares are issuable upon conversion of
warrants issued to the selling shareholders in a private placement that closed
on March 1, 2001.  The warrants have a conversion price of $.001 per share.

The private placement was made pursuant to the exemption from registration
contained in Rule 506 of Regulation D under the Securities Act based on the sale
to accredited investors in a private transaction with the purchasers
acknowledging that the securities cannot be resold unless registered or exempt
from registration under the securities laws.  In the private placement, we
agreed with the investors to file the registration statement of which this
prospectus is a part to register the shares for resale in the U.S.

We have filed this prospectus and the related registration statement with the
SEC to allow the selling shareholders to resell the common stock to third
parties according to the plan of distribution described in this prospectus. See
"Plan of Distribution."

Description of March 2001 Private Placement.  On March 1, 2001, we borrowed
approximately $13.8 million from four lenders:  B III Capital Partners, L.P., B
III-A Capital Partners, L.P., DDJ Canadian High Yield Fund and State Street Bank
& Trust, as Custodian for General Motors Employees Global Group Pension Trust.
In connection with the secured loan, we issued warrants to purchase an aggregate
of 4,036,978 shares of common stock with an exercise price of $.001 per share to
the four lenders as an incentive for them to make the loan.  The warrants are
exercisable through March 1, 2006 and contain weighted average anti-dilution
protection in the event we issue equity securities at a price less than market
price determined in the manner set forth in the Warrant Agreement.  DDJ Capital
Management, LLC, serves as the investment advisor to each such entity and,
accordingly, may be deemed the beneficial owner of the shares of common stock
underlying the warrants received by the lenders.  The terms of the transaction,
including the terms of the warrants, were determined by arms length negotiations
between Pacific Aerospace and the lenders.  We also paid a commission of
approximately $415,000 to the placement agent that represented us in the
transaction, and we also have an obligation to issue warrants to purchase up to
692,074 shares of our common stock to the placement agent, at an exercise price
of $.4062 per share.  We used approximately $9.5 million of the loan to repay
our revolving line of credit in the U.S. and to pay the interest payment on our
11 1/4% senior subordinated notes that was due on February 1, 2001.  The
remainder of the proceeds were used to replace our line of credit in the United
Kingdom, to pay costs of the secured loan transaction and to provide working
capital.  The transaction documents also provided that Pacific Aerospace would
file a registration statement registering the shares of common stock underlying
the warrants issued to the lenders within 30 days following the closing of the
loan.

                                       19


The lenders may exercise the warrants at any time for the exercise price of
$.001 per share, whereupon they will receive up to an aggregate amount of
4,036,978 shares of common stock of the Company, which are the shares covered by
this prospectus.

Information Regarding the Selling Shareholders.  None of the selling
shareholders have held any positions or offices or have had any other material
relationships with Pacific Aerospace or any of its affiliates within the past
three years prior to becoming our senior secured lender.

The following table sets forth information as of March 28, 2001, to the best of
our knowledge, regarding the ownership of common stock by the selling
shareholders and as adjusted to give effect to the sale of the shares offered by
this prospectus.





                                                                    Shares Beneficially Owned
                                                                  After Offering if All Shares
                                      Shares                               Offered by
                                   Beneficially                     this Prospectus are Sold
                                  Owned Prior to   Shares Being   -----------------------------
Selling Shareholder                  Offering        Offered         Shares           Percent
- -------------------               --------------   ------------   ------------      -----------
                                                                        
DDJ Capital Management, LLC(1)      4,036,978       4,036,978              0             *

___________________
 *   Less than 1% beneficial ownership.

(1)  DDJ Capital Management, LLC serves as the investment adviser to each of (i)
     B III Capital Partners, L.P., (ii) B III-A Capital Partners, L.P., (iii)
     DDJ Canadian High Yield Fund, and (iv) State Street Bank and Trust, as
     Custodian for General Motors Employees Global Group Pension Trust.  As such
     DDJ Capital Management, LLC may be deemed to be the beneficial owner of the
     4,036,978 shares of common stock underlying warrants received by these four
     institutional investors in a private placement.  As of March 28, 2001, B
     III Capital Partners L.P. owned warrants to purchase 1,883,923 shares of
     common stock (4.4%), B III-A Capital Partners, L.P. owned warrants to
     purchase 807,396 shares of common stock (1.9%); DDJ Canadian High Yield
     Fund owned warrants to purchase 538,263 shares of common stock (1.3%); and
     the General Motors Employees Global Group Pension Trust owned warrants to
     purchase 807,396 shares of common stock (1.9%).  Each of the four
     institutional investors may be a selling shareholder under this prospectus.

                              PLAN OF DISTRIBUTION

The selling shareholders, or their pledgees, donees, transferees, or any of
their successors in interest selling shares received from a named selling
shareholder as a gift, partnership distribution or other non-sale-related
transfer after the date of this prospectus (all of whom may be selling
shareholders), may sell the securities from time to time on any stock exchange
or automated interdealer quotation system on which the securities are listed, in
the over-the-counter market, in privately negotiated transactions or otherwise,
at fixed prices that may be changed, at market prices prevailing at the time of
sale, at prices related to prevailing market prices or at

                                       20


prices otherwise negotiated. The selling shareholders may sell the securities by
one or more of the following methods, without limitation:

(a)  block trades in which the broker or dealer so engaged will attempt to sell
     the securities as agent but may position and resell a portion of the block
     as principal to facilitate the transaction;

(b)  purchases by a broker or dealer as principal and resale by the broker or
     dealer for its own account pursuant to this prospectus;

(c)  an exchange distribution in accordance with the rules of any stock exchange
     on which the securities are listed;

(d)  ordinary brokerage transactions and transactions in which the broker
     solicits purchases;

(e)  privately negotiated transactions;

(f)  short sales;

(g)  through the writing of options on the securities, whether or not the
     options are listed on an options exchange;

(h)  through the distribution of the securities by any selling shareholder to
     its partners, members or stockholders;

(i)  one or more underwritten offerings on a firm commitment or best efforts
     basis; or

(j)  any combination of any of these methods of sale.

The selling shareholders may also transfer the securities by gift.  We do not
know of any arrangements by the selling shareholders for the sale of any of the
securities.

The selling shareholders may engage brokers and dealers, and any brokers or
dealers may arrange for other brokers or dealers to participate in effecting
sales of the securities.  These brokers, dealers or underwriters may act as
principals, or as an agent of a selling shareholder.  Broker-dealers may agree
with a selling shareholder to sell a specified number of the securities at a
stipulated price per security.  If the broker-dealer is unable to sell
securities acting as agent for a selling shareholder, it may purchase as
principal any unsold securities at the stipulated price.  Broker-dealers who
acquire securities as principals may thereafter resell the securities from time
to time in transactions in any stock exchange or automated interdealer quotation
system on which the securities are then listed, at prices and on terms then
prevailing at the time of sale, at prices related to the then-current market
price or in negotiated transactions.  Broker-dealers may use block transactions
and sales to and through broker-dealers, including transactions of the nature
described above.  The selling shareholders may also sell the securities in
accordance with Rule 144 under the Securities Act, rather than pursuant to this
prospectus, regardless of whether the securities are covered by this prospectus.
Rule 144 would be available to the selling shareholders after they have had a
holding period of one year for the securities.  After the one-year holding

                                       21


period is satisfied, each selling shareholder could sell common stock in market
transactions, subject to a limit during any three-month period of the greater of
1% of our outstanding common stock or the average weekly trading volume of our
common stock calculated pursuant to Rule 144.  After a selling shareholder has a
two-year holding period for the securities, if the selling shareholder is not a
controlling person of our company, the selling shareholder could resell shares
of our common stock without restriction.

From time to time, one or more of the selling shareholders may pledge,
hypothecate or grant a security interest in some or all of the securities owned
by them.  The pledgees, secured parties or persons to whom the securities have
been hypothecated will, upon foreclosure in the event of default, be deemed to
be selling shareholders.  The number of a selling shareholder's securities
offered under this prospectus will decrease as and when it takes any of these
actions. The plan of distribution for that selling shareholder's securities will
otherwise remain unchanged. In addition, a selling shareholder may, from time to
time, sell the securities short, and, in those instances, this prospectus may be
delivered in connection with the short sales and the securities offered under
this prospectus may be used to cover short sales.

To the extent required under the Securities Act, the aggregate amount of selling
shareholders' securities being offered and the terms of the offering, the names
of any agents, brokers, dealers or underwriters and any applicable commission
with respect to a particular offer will be set forth in an accompanying
prospectus supplement.  Any underwriters, dealers, brokers or agents
participating in the distribution of the securities may receive compensation in
the form of underwriting discounts, concessions, commissions or fees from a
selling shareholder and/or purchasers of selling shareholders' securities of
securities, for whom they may act (which compensation as to a particular broker-
dealer might be in excess of customary commissions).

The selling shareholders and any underwriters, brokers, dealers or agents that
participate in the distribution of the securities may be deemed to be
"underwriters" within the meaning of the Securities Act, and any discounts,
concessions, commissions or fees received by them and any profit on the resale
of the securities sold by them may be deemed to be underwriting discounts and
commissions.

A selling shareholder may enter into hedging transactions with broker-dealers
and the broker-dealers may engage in short sales of the securities in the course
of hedging the positions they assume with that selling shareholder, including,
without limitation, in connection with distributions of the securities by those
broker-dealers.  A selling shareholder may enter into option or other
transactions with broker-dealers that involve the delivery of the securities
offered hereby to the broker-dealers, who may then resell or otherwise transfer
those securities.  A selling shareholder may also loan or pledge the securities
offered hereby to a broker-dealer and the broker-dealer may sell the securities
offered hereby so loaned or upon a default may sell or otherwise transfer the
pledged securities offered under this prospectus.

The selling shareholders and other persons participating in the sale or
distribution of the securities will be subject to applicable provisions of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder, including Regulation M.  This regulation may

                                       22


limit the timing of purchases and sales of any of the securities by the selling
shareholders and any other person. The anti-manipulation rules under the
Securities Exchange Act of 1934 may apply to sales of securities in the market
and to the activities of the selling shareholders and their affiliates.
Furthermore, Regulation M may restrict the ability of any person engaged in the
distribution of the securities to engage in market-making activities with
respect to the particular securities being distributed for a period of up to
five business days before the distribution. These restrictions may affect the
marketability of the securities and the ability of any person or entity to
engage in market-making activities with respect to the securities.

We have agreed to indemnify in certain circumstances the selling shareholders
against certain liabilities, including liabilities under the Securities Act.
The selling shareholders have agreed to indemnify us in certain circumstances
against certain liabilities, including liabilities under the Securities Act, as
amended.

The securities offered pursuant to this prospectus were originally issued to the
selling shareholders pursuant to an exemption from the registration requirements
of the Securities Act.  We agreed to register the securities under the
Securities Act, and to keep the registration statement of which this prospectus
is a part effective until the later of  March 1, 2003 and the date that is three
months after the date on which a selling shareholder ceases to be an affiliate
Pacific Aerospace.  We have agreed to pay all fees and expenses incident to the
registration of the shares, including the fees and expenses of counsel to the
selling shareholders.

We will not receive any proceeds from sales of any securities by the selling
shareholders.

We cannot assure you that the selling shareholders will sell all or any portion
of the securities offered pursuant to this prospectus.

                                    EXPERTS

The consolidated financial statements of Pacific Aerospace & Electronics, Inc.
as of May 31, 1999 and 2000 and for each of the years in the three-year period
ended May 31, 2000 have been incorporated by reference in this prospectus and in
the registration statement of which this prospectus is a part in reliance upon
the report of KPMG LLP, independent certified public accountants, incorporated
by reference herein and therein, and upon the authority of that firm as experts
in accounting and auditing.  The report of KPMG LLP contained in our annual
report on Form 10-K/A for the year ended May 31, 2000, contains an explanatory
paragraph that states that Pacific Aerospace's recurring losses from operations
raise substantial doubt about our ability to continue as a going concern.  Our
consolidated financial statements do not include any adjustments that might
result from the outcome of that uncertainty.

                                       23


                                 LEGAL MATTERS

The validity of the issuance of the shares offered by this prospectus has been
passed upon for Pacific Aerospace by Sheryl A. Symonds, Esq., Vice President
Administration and General Counsel of Pacific Aerospace.  As of April 2, 2001,
Ms. Symonds owned 7,343 shares of our common stock and had options to acquire an
additional 260,000 shares and public warrants to purchase 500 shares of common
stock.

                                       24


                                                   PACIFIC AEROSPACE &
This prospectus does not constitute an              ELECTRONICS, INC.
offer to sell or a solicitation of an
offer to buy the shares:
                                                    4,036,978 Shares
  .  in any jurisdiction in which such
     offer to sell or solicitation is                      of
     not unauthorized;
                                                      Common Stock
  .  in any jurisdiction in which the              __________________
     person making such offer or
     solicitation is not qualified to do               PROSPECTUS
     so; or
                                                   __________________
  .  to any person to whom it is
     unlawful to make such offer or
     solicitation.                                    April 6, 2001