Using X-ray diffraction, photoconductivity and temperature dependent conductivity measurements, we investigate GaN:Gd layers grown by reactive molecular-beam epitaxy with the Gd concentration ranging from 7×10 15 to 8.5×10 18 cm −3 . Our study reveals that the incorporation of Gd produces a large concentration of defects in the GaN lattice. The density of these defects generated even with a Gd concentration as low as 7×10 15 cm −3 is estimated to be as high as ≈10 19 cm −3 . The defect state is found to be located ≈450 meV away from the band edge.