Excitonic emission in heteroepitaxially grown aluminum nitride (AlN) with reduced defect density due to the epitaxial lateral overgrowth (ELO) of patterned AlN/sapphire templates has been investigated by photoluminescence spectroscopy and compared to AlN/sapphire and homoepitaxially grown AlN. The ELO sample exhibits small linewidths of the free exciton and two different bound exciton emission bands. The free exciton emission energy is shifted by 58.5 meV with respect to unstrained homoepitaxially grown AlN attributed to compressive strain. A donor bound exciton D0X with an exciton localization energy of 13.0–13.5 meV is dominating in the photoluminescence spectra of ELO AlN/sapphire. This D0X does not show strong phonon replica and is dominant at elevated temperatures in ELO AlN/sapphire. The optical quality of heteroepitaxial AlN is significantly improved using the ELO technique and therefore suitable for high efficiency ultraviolet light emitters.