The geometry parameters, band structure, electronic density of states, and optical properties of AlN before and after being co-doped by Cu and O are investigated by the ultra-soft pseudo-potential plane wave based the density functional theory. The results show that the lattice volume increases and the total energy of the system decreases after doping. The Cu doping system makes Cu 3d electrons hybridize with its nearest neighbor N 2p electrons strongly. In the Cu-O co-doped system, Cu and O attract each other to overcome the repelling of acceptor Cu atoms, thereby increasing the doping concentration of Cu atoms and the stability of the system. Dielectric function calculation results show that Cu-O co-doping can improve the optical transition characteristics in low energy area of AlN electrons, and thus enhancing the optical transition of electrons in visible area. The complex refractive index calculation results indicate that Cu-O co-doped system increases the absorption of low frequency electromagnetic wave.