In this paper, a carbothermal reduction and nitridation (CRN) synthesis for cubic aluminum oxynitride (γ-AlON) powders is reported. The CRN reaction was conducted via a two-step synthesis procedure at a heating rate of 100 °C/min. In the first step, the mixture of fine γ-Al2O3 and soluble starch was annealed at 1550~1580 °C for different duration. It is found that the mixture of α-Al2O3 and AlN with an appropriate ratio can be obtained by CRN reaction. The content of AlN in mixture is closely related with the reaction condition. In the second step, the as-received mixture of α-Al2O3 and AlN was heat-treated at 1700 °C for 10 min. The single phase γ-AlON powders with particle size less than 3 µm were obtained.