The electronic structure and optical properties of silica glass implanted with Gd‐ions by the pulsed implantation technique are studied. Experimental XPS data combined with the theoretical density functional theory (DFT)‐modeling establish the most probable scenarios for Gd‐embedding at the interstitial and substitutional positions in silica before and after thermal annealing. The optical absorption spectra are analyzed within two spectral regions of direct interband transitions and exponential Urbach tails. The influence of both radiation and thermal treatment on the overall structural disorder of host‐matrix is determined using fundamental optical parameters (band gap, phonon energy). The local atomic displacements caused by the implantation damage and thermal recovery of host‐structure for as‐implanted and annealed samples are quantitatively estimated.