Epitaxial ZnO thin films grown by atomic layer deposition on GaN/Al2O3 substrates are implanted with Yb, Dy, and Pr ions to a fluence of 5 × 1014 at cm−2 and subsequently anneals at 800 °C using a rapid thermal annealing (RTA) system. Structural properties of implanted and annealed ZnO films and the optical response are evaluated by channeling Rutherford backscattering (RBS/c) and photoluminescence spectroscopy (PL), respectively. RTA leads to a partial removal of the post‐implantation defects with simultaneous native defects transformation and optical activation of RE ions. It is found that two groups of defects: defects formed during implantation process and native defects, play an important role in the luminescence in the visible region. The room temperature PL spectra obtained from annealed ZnO:RE films do not show sharp PL lines from transitions within the RE 4f shell, but show near band gap emission and defect related emission, which energy emission is controlled by the RE atoms. It suggests a presence of RE‐related complexes that are formed during high‐temperature annealing in oxygen atmosphere. The excitonic and defect emission modified by RE ions create an optical response of the system resulting in a specific color of the emitted light.