We investigated fabrication of neodymium doped thin film optical waveguide-based devices as potential active sources for planar integrated optics. Liquid-phase epitaxial growth was used to fabricate neodymium-doped yttrium aluminum borate films on compatible lattice-matched un-doped yttrium aluminum borate substrates. We observed the refractive index contrast of the doped and un-doped crystal layers by differential interference contrast microscopy. In addition, characterization by X-ray powder diffraction, optical absorption and luminescence spectra demonstrated the crystal quality and uniformity and optical guiding of the resulting thin films.