Using Al-Mg and Al-Mg-Y alloys as raw materials and nitrogen as gas reactants, AlN powders and composite AlN powders by in-situ synthesis method were prepared. AlN lumps prepared by the nitriding of Al-Mg and Al-Mg-Y alloys have porous microstructure, which is favorable for pulverization. They have high purity, containing 1.23%(mass fraction) oxygen impurity, and consisted of AlN single phase. The average particle size of AlN powders is 6.78 μm. Composite AlN powders consist of AlN phases and rare earth oxide Y2O3 phase. The distribution of particle size of AlN powders shows two peaks. In view of packing factor, AlN powders with such size distribution can easily be sintered to high density.