Zinc oxide epilayers grown by metal organic vapour phase epitaxy on (0 0 0 1) sapphire substrates were doped with Praseodymium and Europium by ion implantation. The as-implanted samples were either annealed in air for 20 min in a tube furnace or rapid thermal annealing (RTA) was performed, for 2 min, in a nitrogen atmosphere. The samples were characterized by Rutherford Backscattering Spectrometry/Channelling and photoluminescence. The presented results indicate that in the as-implanted samples the majority of the rare earth (RE) ions are incorporated into substitutional Zn-sites. Furnace annealing at 1000 °C recovers the crystal quality of the samples but leads to an out-diffusion of the RE. RTA suppresses diffusion but lattice damage is not fully recovered at 1000 °C. More importantly, during RTA the RE ions are driven from the substitutional site and are now found mainly on random interstitial sites and no optical activation could be achieved.