Doping of AIN with Cr at percent level concentrations produces ferromagnetism persisting to above 300 K. We have examined the electrical and optical properties of Cr-doped AIN grown by molecular beam epitaxy under conditions that produce single-phase or multiple phase material, as measured by x-ray diffraction. The band gap of single-phase AIN decreases from 6.2 to 6.1 eV for a Cr concentration of 2 at. %. This change originates from the Franz-Keldysh broadening of the band edge due to potential fluctuations caused by heavy Cr doping. The effect was more pronounced in multiple-phase samples (the secondary phases are Cr2N and AlxCry.), producing an apparent band gap of 5.8 eV. Two strong defect absorption bands with thresholds of 3 and 5 eV are introduced by the Cr doping. The resistivity of single-phase AlCrN samples is higher than the resistivity of similarly grown undoped AIN films.. Multiple-phase AlCrN samples show a high conductivity of the hopping type. The optical transmission spectra of multiphase AlCrN indicates appreciable absorption by free carriers and strong scattering, both most likely due to the presence of conducting inclusions. (C) 2004 American Vacuum Society.