The erbium incorporation into LiNbO3 by diffusion doping is investigated in detail by means of Secondary Ion Mass Spectrometry, Secondary Neutral Mass Spectrometry, Rutherford Backscattering, Atomic Force Microscopy, X-ray Standing Wave technique and optical site-selective spectroscopy. The diffusion of erbium in LiNbO3 can be described by Fick’s laws of diffusion with a concentration-independent diffusion coefficient. The diffusion constants and activation energies for Z-cut (X-cut) LiNbO3 are 4.8×10-5 cm2/s (12.0×10-5 cm2/s) and 2.28 eV (2.44 eV), respectively. A limited solubility of erbium in LiNbO3 has to be taken into account increasing exponentially with rising temperature. During the first step of diffusion an Er x Nb y -oxide layer is formed at the surface of the sample acting as diffusion reservoir. Erbium is incorporated into LiNbO3 on vacant Li-sites slightly shifted from the original Li-position along the (-c)-direction. Site-selective spectroscopy found four distinguishable energetically different erbium centres at this lattice site resulting from locally different symmetries of the crystal field.