Thermal diffusion from thin film is one of the most widespread approaches to prepare iron doped regions in lithium niobate with limited size for photorefractive applications. In this work, we investigate the doping process with the aim of determining the best process conditions giving a doped region with the characteristics required for photorefractive applications. Six samples were prepared by changing the atmosphere employed in the diffusion treatment in order to obtain different combination of diffusion profiles and reduction degrees and also to check the effect of employing a wet atmosphere. The compositional, optical, and structural properties are then extensively characterized by combining Secondary ion Mass Spectrometry, UV, visible and IR spectrophotometry, High Resolution X-Rays Diffrac- tion, and Micro-Raman Spectroscopy. Moreover, the sample topography was checked by Atomic Force Microscopy. An analysis of all our data shows that the best results are obtained performing a double step process, i.e. diffusion in oxidizing atmosphere and subsequent reduction at lower tem- perature in an hydrogen-containing atmosphere.