The effect of impurities and defects on the optical properties of AlN was investigated. High-quality AlN single crystals of more than 20 mm2 size were examined. Different crucible materials and growth procedures were applied to the growth of bulk AlN by physical vapor transport method to vary the defect and the impurity concentrations. The crystalline orientation was investigated by Raman spectroscopy. Glow discharge mass spectrometry was used to determine the trace concentration of the incorporated impurities such as oxygen and carbon. The photoluminescence emission and absorption properties of the crystals revealed bands around 3.5 and 4.3 eV at room temperature. Absorption edges ranging between 4.1 and 5.95 eV were observed. Since no straight correlation of the oxygen concentration was obtained, a major contribution of oxygen or oxygen-related impurities was ruled out to generate the observed emission and absorption bands in the Ultraviolet spectral range. The carbon-related impurities and intrinsic defects might contribute to the observed optical properties. The absorption coefficient for AlN single crystals has been derived for the spectral range below the band edge.