We report, for the first time to our knowledge, on the fabrication of optical channel waveguides in neodymium-doped yttrium aluminum garnet transparent ceramics by oxygen implantation. The fabricated waveguides show reduced propagation losses (1.5 dB/cm), as well as the possibility of waveguide-mode tailoring. The confocal fluorescence images of the channel waveguides reveal that oxygen implantation causes only slight changes in the fluorescence properties of neodymium ions making the fabricated structures promising candidates for integrated laser sources in the infrared bands.