A systematic investigation is presented of the polarized optical absorption of the Nd3+ ion in LiNbO3 and LiNbO3(MgO) crystals. Energy levels of Nd3+ are identified and labeled by appropriate crystal quantum numbers μ=1/2 or μ=3/2, in agreement with C3 local symmetry. The anisotropic Judd-Ofelt theory is applied to estimate spectroscopic parameters relevant for laser applications (radiative lifetimes and branching ratios from the 4F3/2 laser state). Fluorescence lifetimes are also determined to estimate the quantum efficiency from the 4F3/2 state: η=0.6 for LiNbO 3:Nd and η=0.5 for LiNbO3(MgO):Nd. The effect of MgO codoping in the energy levels as well as in the spectroscopic parameters of the Nd3+ ion is evaluated and discussed. © 1995 American Institute of Physics.