Experimental work on the study of erbium (Er) diffusion and the characterisation of Er-diffused layers required to form waveguide amplifiers in LiNbO3 substrate is presented. The presence of active Er in the lattice of LiNbO3 is investigated using x-ray photoelectron spectroscopy (XPS), photoluminescence (PL) measurement, and spectroscopic reflectometry. The shift of XPS peaks confirms the oxidized state of Er. The PL spectrum shows a sharp peak at 1530-nm wavelength, indicating the 4I15/2→4I13/2 lasing transition of Er3+. The reflectance spectrum indicates absorption at ~980 and ~1500 nm.