Ce-doped yttrium aluminum garnet (YAG:Ce) has been used as a phosphor emitting white light using a blue-light-emitting diode as a light source. Recently, studies on laser lighting as next-generation lighting have been carried out. However, because a high-power blue laser diode is used as the light source, the decrease in phosphor emission due to temperature increase (thermal quenching) has become a serious issue. Therefore, it is desirable to develop a method to suppress the temperature increase of the YAG:Ce phosphor. To increase the thermal conductivity of the YAG:Ce phosphor and suppress the temperature increase, we fabricated a composite ceramic of AlN (nonoxide), which has a high thermal conductivity, and YAG:Ce (oxide) using a modified vapor transport equilibration technique. The oxynitride was not completely removed, but we succeeded in adding up to 80 wt% AlN to YAG:Ce. The ceramic with 50% added AlN had a thermal conductivity up to 19.2 W m−1K−1 and emitted almost the same intensity as that of the nondoped YAG:Ce. This thermal conductivity exceeds the reported values of 12–13 W m−1K−1 for Al2O3–YAG:Ce composite ceramics. Moreover, the luminous efficacy exhibited by the ceramic with a 20 wt% AlN addition was 266.0 lmW−1, which is larger than the reported values obtained from composite ceramics.