<?xml version="1.0"?>
<ownershipDocument>

    <schemaVersion>X0201</schemaVersion>

    <documentType>4</documentType>
    <periodOfReport>2003-08-05</periodOfReport>
    <notSubjectToSection16>0</notSubjectToSection16>
    <issuer>
        <issuerCik>0000796317</issuerCik>
        <issuerName>ALLIANCE FINANCIAL CORP /NY/</issuerName>
        <issuerTradingSymbol>ALNC</issuerTradingSymbol>
    </issuer>

    <reportingOwner>

        <reportingOwnerId>
            <rptOwnerCik>0001242551</rptOwnerCik>
            <rptOwnerName>LANZAFAME SAMUEL J</rptOwnerName>
        </reportingOwnerId>
        <reportingOwnerAddress>
            <rptOwnerStreet1>425 ELIZABETH STREET</rptOwnerStreet1>
            <rptOwnerStreet2></rptOwnerStreet2>
            <rptOwnerCity>ONEIDA</rptOwnerCity>
            <rptOwnerState>NY</rptOwnerState>
            <rptOwnerZipCode>13421</rptOwnerZipCode>
            <rptOwnerStateDescription></rptOwnerStateDescription>
        </reportingOwnerAddress>
            <reportingOwnerRelationship>
        <isDirector>1</isDirector>
        <isOfficer>0</isOfficer>
        <isTenPercentOwner>0</isTenPercentOwner>
        <isOther>0</isOther>
    </reportingOwnerRelationship>
    </reportingOwner>

    <nonDerivativeTable>
        <nonDerivativeTransaction>

        <securityTitle>
            <value>Common Stock</value>
        </securityTitle>

        <transactionDate>
            <value>2003-08-05</value>
        </transactionDate>
    <transactionCoding>
        <transactionFormType>4</transactionFormType>
        <transactionCode>S</transactionCode>
        <equitySwapInvolved>0</equitySwapInvolved>
    </transactionCoding>
        <transactionAmounts>

            <transactionShares>
                <value>105</value>
            </transactionShares>

            <transactionPricePerShare>
                <value>29.67</value>
            </transactionPricePerShare>

            <transactionAcquiredDisposedCode>
                <value>D</value>
            </transactionAcquiredDisposedCode>
        </transactionAmounts>
        <postTransactionAmounts>

            <sharesOwnedFollowingTransaction>
                <value>1065</value>
                <footnoteId id="F1"/>
            </sharesOwnedFollowingTransaction>
        </postTransactionAmounts>
        <ownershipNature>

            <directOrIndirectOwnership>
                <value>I</value>
            </directOrIndirectOwnership>

            <natureOfOwnership>
                <value>By Children</value>
            </natureOfOwnership>
        </ownershipNature>
        </nonDerivativeTransaction>

        <nonDerivativeHolding>

        <securityTitle>
            <value>Common Stock</value>
        </securityTitle>
        <postTransactionAmounts>

            <sharesOwnedFollowingTransaction>
                <value>13800</value>
                <footnoteId id="F1"/>
            </sharesOwnedFollowingTransaction>
        </postTransactionAmounts>
        <ownershipNature>

            <directOrIndirectOwnership>
                <value>I</value>
            </directOrIndirectOwnership>

            <natureOfOwnership>
                <value>By Spouse</value>
            </natureOfOwnership>
        </ownershipNature>
        </nonDerivativeHolding>

        <nonDerivativeHolding>

        <securityTitle>
            <value>Common Stock</value>
        </securityTitle>
        <postTransactionAmounts>

            <sharesOwnedFollowingTransaction>
                <value>1352</value>
            </sharesOwnedFollowingTransaction>
        </postTransactionAmounts>
        <ownershipNature>

            <directOrIndirectOwnership>
                <value>D</value>
            </directOrIndirectOwnership>
        </ownershipNature>
        </nonDerivativeHolding>

    </nonDerivativeTable>
    <footnotes>
        <footnote id="F1">The reporting person disclaims ownership of these securities and this report shall not be deemed an admission that the reporting person is the beneficial owner of such securities for the purpose of section 16 or otherwise.</footnote>
    </footnotes>

    <ownerSignature>
        <signatureName>/s/ Judy A. Schultz, Attorney In Fact</signatureName>
        <signatureDate>2003-08-05</signatureDate>
    </ownerSignature>

</ownershipDocument>

