Cr concentrations of similar to2 at. % were incorporated into AlN during growth by molecular beam epitaxy. Under optimized conditions, single-phase, insulating AlCrN is produced whose band gap shows a small (0.1-0.2 eV) decrease from the value for undoped AlN (6.2 eV), a decrease in a-plane lattice constant and the introduction of two absorption bands at 3 and 5 eV into the band gap. This material shows ferromagnetism with a Curie temperature above 300 K as judged from the difference in field-cooled and zero-field-cooled magnetization. For nonoptimized growth, second phases of Cr2N and AlxCry are produced in the AlN and the material is conducting (similar to1000 Omega cm) with activation energy for conduction of 0.19 eV and apparent band gap of 5.8 eV. (C) 2004 American Institute of Physics.