To investigate the nature of 3d-4f exchange interactions in III-Nitride semiconductors, Ti-Ce co-doped AlN were studied using first principles calculations. The calculations were performed using supercell approach with varying dopant concentration and different inter-dopant separation. The configuration with dopant located as nearest neighbor distance and diluted concentration of 3.125% was found most stable. The results exhibited prominent evidence of 3d-4f-5d strong hybridization suggesting 3d-4f direct exchange interactions which may play valuable role to exploit the system as high Curie temperature ferromagnetic semiconductors for use in spintronics. Moreover, metal to metal charge transfer was also observed in the materials which may be exploited for their use in electrochemical applications. The 4f-5d and 3d-5d hybridizations were observed that predicts excellent luminescence phenomena in the materials. The presence of impurity related deep intermediate bands suggest applications of the materials in opto-electronic and spintronics devices. (C) 2016 Elsevier B.V. All rights reserved.