We report a novel way of reducing the unwanted absorption loss in silicon-oxynitride (SiON) waveguides by replacing nitrogen-hydrogen (N-H) bonds with nitrogen-deuterium (N-D) bonds in an isotope exchange process. D was introduced to SiON layers in an atmospheric D anneal after the deposition of SiON. The deuterated SiON showed a factor of 2 less absorption at 1.51 μm than before the D anneal. This is an additional loss reduction, since a typical pre-anneal in N2 reduces the loss by a factor of 10. Compared to the loss in as-deposited SiON at this wavelength, the loss after D anneal is reduced by a factor of 20. The D annealing temperature varied from 450 to 950 °C. There is a correlation between the loss reduction and the level of isotope exchange in the SiON waveguide, and also, an onset temperature for thermal activation of the isotope exchange. This mechanism is characterized carefully by secondary ion mass spectrometry (SIMS).