The damage layers generated in III–V compounds exposed to energetic gallium ions in a focused ion beam (FIB) instrument have been characterized by transmission electron microscopy (TEM). The damage on the side walls of the milled trenches is in the form of amorphous layers associated with direct amorphization from the gallium beam, rather than from redeposition of milled material. However, the damage on the bottom of the milled trenches is more complex. For InP and InAs the damage layers include the presence of crystalline phases resulting from recrystallization associated heating from the incident beam and gallium implantation. In contrast, such crystalline phases are not present in GaAs. The thicknesses of the damage layers are greater than those calculated from theoretical models of ion implantation. These differences arise because the dynamic nature of FIB milling means that the energetic ion beams pass through already damaged layers. In InP recoil phosphorus atoms also cause significant damage.