Structural modifications induced by femtosecond laser pulses in LiNbO3 were studied. The influence of the processing and focusing parameters was investigated. Two different types of modifications could be identified. High laser fluences cause a refractive index decrease, material damage and stresses in the surrounding crystalline lattice. At low laser fluences, an extraordinary index increase was observed that allows for optical waveguiding. This kind of modification is thermally unstable and correlates to a weak distortion of the lattice. The electrooptic coefficient measured in a waveguide was found to be substantially reduced. The mechanisms underlying the structural modifications are discussed.