Photoluminescence and Raman scattering spectra from AIN nanocrystalline powders are studied. A blue emission band centered at 420 nm (2.95 eV) is observed. This band may be ascribed to the transition from the shallow level of V-N to the ground state of the deep level of the V-Al(3-)-3 x O-N(+) defect complexes. A phonon structure resulting fi om the transition from the shallow level to the excited states of the deep level is also observed. The broadening of peaks and the low-wave-number-shift of the phonon frequency observed on the Raman scattering spectra are the result of nano-sized effects.