Channel optical waveguides have been formed on both GaAs and InP substrates utilizing deuterium passivation of the surface to provide planar confinement and etching to provide lateral confinement. Design criteria were established for obtaining single mode channel waveguides for the present case of small index changes and thick surface layers associated with deuterium passivation. Planar and channel waveguide operations were demonstrated and channel waveguide propagation losses have been measured. For GaAs channel waveguides, optical loss was measured as a function of channel waveguide width, ranging from 3 to 9 &mgr;m, with a minimum loss found for a width of 6.0 &mgr;m. Channel waveguide losses as low as 12.7 dB/cm for GaAs and 6.0 dB/cm for InP have been measured at &lgr;=1.3 &mgr;m. For InP this loss value is close to the limiting value imposed by free carrier absorption in the semiconductor region below the passivated region. Since the waveguide loss due to free carriers can be reduced by increasing waveguide confinement, we anticipate that lower loss optical channel waveguides could be formed by this technique. ©1997 American Institute of Physics.