Aluminum dross is presented as a potential material to form AlON using thermite reaction. The commercial MgAl powder, active carbon, and titania were prepared to make a chemical furnace (self-propagation combustion). The preheating temperature of 300 degrees C is enough to intitate ignition of the mixture as fuel and oxidizer. The addition of Y2O3 (l wt. %) is effective to enhance solid solution products between Al2O3 and AlN in the Aluminum dross. The level of contamination like an alkali metal oxide in the Aluminum dross was reduced highly by the heat from chemical furnace.