Terbium (Tb) ions were implanted into Al0.35Ga0.65N epitaxial layers at room temperature to investigate ion-beam-induced damage and luminescence properties at various doses of 1×1012–2.8×1016 Tb/cm2. Rutherford backscattering spectrometry/channeling (RBS/channeling) reveals that ion-beam-induced damage level steeply increases and that the damage cannot be fully suppressed even after rapid thermal annealing at 1100 °C, when the dose exceeds 5×1014 Tb/cm2. However, cathodoluminescence (CL) intensity related to Tb3+ transitions increased initially and saturated above a dose of 1×1013 Tb/cm2. Furthermore, transient decay time determined by time-resolved photoluminescence (TRPL) decreased faster and a fast decay component related to the formation of nonradiative Tb-defect complexes became dominant, as Tb ion dose increases. Therefore, the results suggest that Tb-related luminescence properties are much susceptible to defects and nonradiative defects, namely, Tb-defect complexes, are formed under low-dose conditions even at a very low structural defect density.