Aluminum nitride (AlN) possesses superior thermal and electrical properties and is an ideal candidate for high-temperature, as well as for packaging and optoelectronic applications. Aluminum based composites reinforced with AlN have been manufactured via an in situ gas-assisted process, where a nitrogen-bearing gas is injected in the molten aluminum at 1273-1323 K. The process is carried out in an inert atmosphere in order to avoid oxygen contamination. Addition of Mg lowered the oxygen content in the melt by forming MgO and thus favoring the nitridation reaction. Particle size formed in the matrix varied from 1- 3 μm to sub-micron scale depending on the gas injection time. Longer bubbling times give rise to improved reinforcement dispersion. Addition of Si is detrimental for the synthesis of AlN; Mg2Si phase precipitates, replacing the formation of MgO and hindering the nitridation reaction. The challenges of controlling the kinetics are discussed.