In this paper we will explain the preparation of an epitaxially grown ytterbium‐ and neodymium‐co‐doped yttrium aluminum garnet [(Yb,Nd):YAG]–buried channel waveguide laser on a YAG substrate. Waveguides, whose cores are formed with Ar ion beam etching, demonstrate single‐mode operation. The (Yb,Nd):YAG waveguide laser operates at 1.03 &mgr;m when pumped at 0.81 &mgr;m, as a result of a nonradiative energy transfer from Nd3+ions to Yb3+ions. The incident threshold and slope efficiency of the 5 mm long waveguide laser are 235 mW and 13%, respectively. Output power of 50 mW is obtained for an incident power of 620 mW at room temperature. ©1995 American Institute of Physics.