Copper-doped LiNbO3 waveguides were prepared by Cu–Li ion-exchange process. Compositional, structural, and optical analyses were performed by secondary ion mass spectrometry, x-ray diffraction, and m-line spectroscopy, respectively. The chemical state of Cu2+ ions was studied by electron paramagnetic resonance, and the results were correlated with structural modification of the LiNbO3 matrix. Copper incorporation in the crystal took place under different regimes, and it induced a lattice rearrangement with the formation of new crystalline phases. Cu2+ ions were surrounded by tetragonally compressed octahedra with rhombic distortions. Cu:LiNbO3 optical waveguides were formed supporting two optical modes.