The presence of nitrogen in nanostructured aluminum composites milled in liquid nitrogen has been argued to be responsible for reported property improvements, such as high strength and thermal stability. However, it has been experimentally difficult to precisely determine the nature of the nitride phases that form given their small scale (e.g., nm) and limited volume fraction. Moreover, the mechanism by which the nitrogen molecules are absorbed into the aluminum lattice during the cryomilling process remains poorly understood, and experimental studies are often constrained by resolution limits. In this paper, the absorption of nitrogen in Al-alloy composites during cryomilling is investigated from a computational perspective with the aid of the molecular dynamics simulation function in Materials Studio® software. Results indicate that Mg solute atoms in the matrix tend to segregate to Al/Al2O3 interfaces, creating vacancies in the Al lattice and subsequently enhancing the absorption of nitrogen into the Al lattice. The simulations also reveal that not only free N atoms but also N2 molecules can be absorbed into the Al lattice by occupying an Al vacancy. In addition, it is demonstrated that a structural defect, i.e., the presence of vacancies regardless of their source, is a requirement for enhanced absorption of nitrogen in the Al lattice.