We describe the effect of light-induced annealing of As2S3 thin films and its impact on the performance of an optical waveguide. An as-deposited film was subjected to illumination with band-edge light before being used to fabricate sub- micron thick waveguides using photolithography and dry plasma etching. Studies of the film microstructure revealed a difference between the atomic bonds and linked phases between the as-deposited, the thermally-annealed, and the optically-annealed films. Although optical-annealing evolves the structure of the film in a similar way to thermal annealing (i.e., it causes polymerization of the glass network), it can drive the film much closer to bulk state in terms of refractive index and the numbers of wrong bonds. The waveguides showed, however, almost the same propagation losses to those from thermally-annealed material. Nonetheless our results indicate that optical-annealing provides some advantages over thermal annealing for waveguide fabrication.