In this work, the influence of different hydrogen dilution conditions on the optical, structural and passivation properties of crystalline, hexagonal aluminum nitride is assessed. The layers were deposited using an inline sputter coater in reactive Ar+N2 and Ar+N2+H2 atmosphere mixtures. Elemental composition was determined using energy dispersive spectroscopy. The structural properties were investigated applying Fourier transform infrared spectroscopy, X-ray diffraction, and scanning electron microscopy. The optical characterization was performed through transmittance measurements using a modified envelope method. It could be observed that the incorporation of hydrogen leads to an increase of crystalline texture, grain size and bandgap. The full-width at half-maximum of the A1 transverse optical phonon mode decreases with increasing grain size and optical bandgap induced by the deposition conditions, showing a good correlation between the optical and crystalline properties. The potential of aluminum nitride for surface passivation of silicon is discussed in terms of surface recombination velocity, fixed charge density and defect state density at the c-Si/AlN:H interface.