Stable crystalline aluminum doped zinc oxide (AZO) nanopowders were synthesized using hydrothermal treatment processing. Three different aluminum precursors have been used. The Al-precursors were found to affect the morphology of the obtained nanopowders. AZO nanoparticles based on zinc acetate and aluminum nitrate have been prepared with different Al/Zn molar ratios. XRD investigations revealed that all the obtained powders have single phase zincite structure with purity of about 99%. The effect of aluminum doping ratio in AZO nanoparticles (based on Al-nitrate precursor) on structure, phase composition, and particle size has been investigated. The incorporation of Al in ZnO was confirmed by UV-Vis spectroscopy revealing a blue shift due to Burstein-Moss effect.