We report the Stark energy sublevels of Nd3+ ions in GaN grown by plasma‐assisted molecular beam epitaxy as determined by luminescence spectra. The photoluminescence spectra is correlated with transitions from the 4F3/2 doublet state to the 4I9/2, 4I11/2, and 4I13/2 multiplets of the Nd3+ ion for above and below bandgap excitation, with the strongest emission occurring at 1.12 eV (1106 nm). A splitting of the 4F3/2 excited state is determined to be 4.1 meV. From photoluminescence excitation spectra, we also identify the Stark sub‐levels of the excited states 4F5/2, 2H9/2, 4F7/2, 4S3/2, 2G7/2, and 4G5/2. Photoluminescence excitation spectra exhibit an optimal excitation energy of 1.48 eV (836 nm). Site‐selective spectroscopy studies using combined excitation‐emission spectroscopy with confocal microscopy imply enhanced substantial doping at the Ga site. In addition, optical loss and gain measurements of a GaN:Nd waveguide excited above bandgap indicate an internal loss coefficient of ∼6.5 +/– 2 cm–1 and a net gain of ∼ –2 +/– 2 cm–1. (© 2009 WILEY‐VCH Verlag GmbH & Co. KGaA, Weinheim)