This paper reports the development of novel Sintered Aluminium Powder (SAP)-like Al-AlN nanocomposites based on a concept of replacing the native Al2O3 thin films on fine Al powder with a large volume of in-situ formed nanometric AlN dispersoids. Fine gas-atomized Al powder (d50=1.3 μm) green compacts were first partially nitrided at 590 °C in flowing nitrogen, controlled by a small addition of Sn (0.3-0.4wt.%). The compacts were subsequently consolidated by hot working compaction techniques (direct extrusion and forging). The resulting Al-AlN composites consisted of sub-micrometric Al grains reinforced by nanometric AlN dispersoids, and a small presence of nanometric Al2O3 dispersoids. Al-13vol.% AlN nanocomposite exhibited attractive high temperature mechanical properties and thermal stability. The properties of in-situ Al-13vol.% AlN nanocomposite are compared to in-situ Al-2.3vol.% Al2O3 composites fabricated from the same fine Al powder and to the high Al2O3 content SAP materials.