Lithium niobate (LiNbO 3) samples were implanted with 500 keV Nd 3+ ions at a dose of 1 × 10 15 ions/cm 2 at room temperature. Annealing at different temperature was carried out in dry oxygen ambient after the implantation. Diffusion behaviors of Nd atoms and lattice defect annealing were determined using the Rutherford backscattering/channeling technique. Low lattice defect was obtained and more than 80% of the implanted Nd atoms remained in the sample after annealing at 1000 °C for an hour. A planar optical waveguide was successfully fabricated on the annealed sample using subsequent 3.0 MeV O + implantation. Possible propagating modes of the waveguide were measured at wavelength of 633 nm and of 1539 nm, respectively. The present results provide information for the fabrication of waveguide laser in lithium niobate using ion implantation.