Fine aluminum nitride (AlN) powders were prepared by a facile and efficient way of combustion synthesis under micropositive N-2 pressure of 0.15 MPa and with 3 wt% water as additive. By this approach, the maximum combustion temperature was well regulated to a low value. The influence of water on the reaction rate, the phase composition, and crystal growth of the products was systematically investigated. The addition of water was crucial to the complete nitridation of Al. Furthermore, H2O vapor played a two-sided role in the reaction. It could accelerate the reaction by promoting the diffusion of Al vapor and N-2 and restrain the nitridation rate by absorbing heat.