The high thermal conductivity of Aluminum nitride, coupled with its high electrical resistivity and nontoxic nature, makes it a very promising material for electronic substrate. In this study, microstructural characterization on the thermal conductivity of AlN ceramics was investigated. An AlN ceramic was prepared with a dopant Y2O3 under a reducing nitrogen atmosphere with carbon. In order to obtain high thermal conductivity, cooling rate control and after-heat treatment was carried out. Morphology of the second phase was characterized using scanning electron microscopy (SEM). SEM studies showed that the microstructural change caused by after-heat treatment have a major influence on the thermal conductivity.