An innovative method has been developed for synthesizing aluminum-aluminum nitride nanocomposite materials wherein the reinforcing nano-sized aluminum nitride particles are formed in-situ in a molten aluminum alloy. This method, which circumvents most issues associated with the traditional ways of making nanocomposites, involves reacting a nitrogen-bearing gas with a specially designed molten aluminum alloy. The method ensures excellent dispersion of the nanoparticles in the matrix alloy, which is reflected in enhanced mechanical properties. In this thesis, the author reviews the limitations of the conventional methods of manufacturing nanocomposites and develops thermodynamic and kinetic models that allow optimizing the in-situ gas-liquid process to produce quality nanocomposite material. Also, in this thesis, the author reports the measured room temperature and elevated temperature tensile properties of materials that were made by the optimized process and compares the measured values to their counterparts obtained for the base alloy. A 75 pct. increase in room temperature yield strength is obtained when the base alloy is reinforced with one pct. nano-size aluminum nitride particles and this significant increase in yield strength is accompanied by only negligible loss of ductility.