We present a systematic study of the low-temperature magnetotransport properties of modulation-doped GaAs heterostructures to examine the device isolation mechanism in a low-energy ͑150 eV͒ Ar ϩ ion exposure process. Measurements were carried out repeatedly on the same Hall bar as a function of the ion exposure time. A gradual evolution from parallel conduction to strictly single-channel conduction was observed. The carrier density of the upper channel was depleted by ion surface milling, while the lower channel two-dimensional electron gas was essentially unaffected. The data indicated that carrier depletion and the subsequent breakdown in electron screening of the long-range random potential was the main reason for device isolation during the low-energy ion exposure process, in agreement with recent theoretical work.