This paper reports the synthesis of nanocrystalline gallium nitride by ammonothermal reaction of gallium with ammonia using lithium as the transporting agent in the temperature range 350-500 degreesC. Nanocrystalline gallium nitride (particle size 30-70 nm) was obtained. The effects: of temperature and lithium concentration are discussed. Lattice parameters of wurtzite GaN increased with decreasing nanocrystal size, which is explained in terms of lattice relaxation that induces the shift of the Raman scattering spectrum.