Aluminum nitride (AlN) thin films containing various amounts of Co content have been deposited by using a two-facing targets type sputtering (TFTS) system. The deposited films were also annealed successively and isothermally at different temperatures. Annealing treatment can control the physical properties as well as the microstructure of AlN films with Co particles. High magnetization and high resistivity are obtainable in AlN films containing dispersed Co particles. The coercivity of the films does not depend on annealing time, but it increases with increasing annealing temperature due to the increase of the grain size. A high saturation magnetization of 46 kG and resistivity of 2200 ${mu}{Omega}$-cm was obtained for AlN films containing 25 at% Co.