Reaction between nanometer gamma-Al2O3 and H3PO4 to form AlPO4 by hydro-thermal method was studied. The microstructure of the reaction product was examined by SEM (scanning electronic microscope). The phase transformation of AlPO4 was investigated by DSC (differential scanning calorimeter) and XRD (X-ray Diffraction). The relative dielectric constant and dielectric dissipation factor of different kinds of aluminum phosphates were measured. Results of the study led to the optimal parameter of the reaction and showed that aluminum phosphate is a good matrix to make functional ceramic-matrix composites.