Lithium niobate (LiNbO3) exhibits poor radiation resistance when conventionally implanted with Er at room temperature. To repair the structural disorder, high‐temperature post‐implantation anneals are typically required; however, such treatments can cause sample cracking and dopant redistribution, which are incompatible with device applications. The optimized approach is proposed by performing implants at elevated but acceptably low temperatures to in situ minimize the structural defects generated in the collision cascades, via so‐called “dynamic defect annealing”. Thus, a gradual increase in Er optical activity is shown as a function of irradiation temperature in the range of 25–450 °C, in striking correlation with a decreasing trend for the residual disorder. The impact of moderate post‐implantation anneals is also investigated by comparing the results of anneals of samples implanted at 25 °C and 450 °C. This comparison further confirms the higher optical activation of Er and lower residual structural disorder when the material is initially implanted at elevated temperatures. Based on these data, it is concluded that the use of dynamic defect annealing during the Er implantation of LiNbO3is a promising strategy for optimizing it as a quantum memory platform, resolving otherwise inevitable trade‐offs.