Improving the hydrolysis resistance of AlN ceramic powder is crucial to the powder storage and shaping processing. In order to improve the hydrolysis resistance of AlN powder, a hydrolysis-resistant coating was used to act as a barrier layer to prevent water from contacting with the AlN surface. An amorphous Y₂O₃ coating was uniformly deposited and fully wrapped on the surface of AlN powder via a chemical precipitation process. The coating effectiveness and integrity were investigated by TEM, XPS and Zeta potential measurements. The hydrolytic behavior of AlN powder in an aqueous suspension was studied by following the pH vs. time at room temperature. The results show that the coated AlN powder is stable in water within 48 h, indicating that the surface coating treatment with Y₂O₃ can effectively passivate AlN powder against hydrolysis. Moreover, as a way to introduce the sintering additives, the chemical precipitation process can favor an improvement of thermal conductivity of the sintered AlN ceramic, compared with the conventional ball-milling process.