Nanoscaled aluminum nitride (AlN) dispersion strengthened 2024 aluminum alloy was fabricated using a novel approach in which Al-Mg-Cu compacts were partially nitrided in flowing nitrogen gas. The compacts were subsequently consolidated by sintering and hot extrusion. The microstructure and mechanical properties of the material were preliminarily investigated. Transmission electron microscopy and X-ray diffraction results revealed that AlN particles were generated by the nitridation of Al-Mg-Cu compacts. The material exhibited excellent mechanical properties after hot extrusion and heat treatment. The ultimate tensile and yield strengths of the extruded samples containing 8.92vol% AlN with the T6 heat treatment were 675 and 573 MPa, respectively.