AlN-AlN polytypoid composite materials were prepared in situ using pressureless sintering of AlN-Al2O3 mixtures (3.7-16.6 mol% Al2O3) using Y2O3 (1.4-1.5 wt%) as a sintering additive. Materials fired at 1950degreesC consisted of elongated grains of AlN polytypoids embedded in equiaxed AlN grains. The Al2O3 content in the polytypoids varied systematically with the overall Al2O3 content, but equilibrium phase composition was not established because of slow nucleation rate and rapid grain growth of the polytypoid grains. The polytypoids, 24H and 39R, previously not reported, were identified using HRTEM. Solid solution of Y2O3 in the polytypoids was demonstrated, and Y2O3 was shown to influence the stability of the AlN polytypoids. The present phase observations were summarized in a phase diagram for a binary section in the ternary system AlN-Al2O3-Y2O3 parallel to the AlN-Al2O3 join. Fracture toughness estimated from indentation measurements gave no evidence for a strengthening mechanism due to the elongated polytypoids.