MgO single crystals were implanted with Er ions to a fluence of 5x10 1 5 ions/cm 2 . The implantations were carried out at room temperature with an energy of 150 keV. Despite the large amount of damage produced during the implantation the Er ions are incorporated in optically active sites. Photoluminescence measurements at 77 K reveal the presence of the fingerprint Er 3 + emission at 1.54 μm due to 4 I 1 3 / 2 -> 4 I 1 5 / 2 transition. Angular scans performed through the main axes show complete overlap between Er and magnesium curves. Subsequent annealing in a reducing atmosphere at 1000 o C for 1 h leads to the recovery of the implantation damage. During the annealing the fraction of Er in Mg sites decreases from 100% to 53%. This movement of the Er ions is accompanied by changes in the optical spectra. Further annealing for 2 h at the same temperature leads to more precipitation of Er into random sites, whereby the fraction of Er in Mg lattice sites decreases to 20% while there is an enhancement of optical activity.