Diluted magnetic semiconductor materials have attracted extensive attention as candidate materials for a new generation of multifunctional spintronic devices. At present, doping is an effective method to adjust the physical properties of semiconductor materials. Here, the Gd doped AlN (AlN:Gd) hierarchical microstructures were synthesized from mixtures of Al and Gd2O3 powder and N2 working medium by improved arc discharge method. The samples were analyzed by X-ray diffraction, X-ray photoelectron spectroscopy, Raman spectroscopy, energy dispersive X-ray spectroscopy, scanning electron microscopy, photoluminescence (PL) spectroscopy and vibrating sample magnetometer. The analysis results show that Gd ions are successfully doped into AlN hierarchical microstructures. The PL spectrum excited by 200 nm exhibits a sharp emission line at 318 nm corresponding to 6P7/2-8S7/2 transitions of the Gd3+ ion, and a broad emission band round at 395 nm, which is related to with Al vacancy and O impurity defects. The magnetization curves suggest AlN:Gd hierarchical microstructures process room-temperature ferromagnetic behavior. The latter first-principle calculations indicate that the main origin of the magnetism in AlN:Gd arise from Al vacancies rather than magnetic Gd dopants. Our results suggest that the AlN:Gd hierarchical microstructures are promising materials for spintronic applications.