Erbium-doped SiO2 toroidal microcavity lasers are fabricated on a Si substrate using a combination of optical lithography, etching, Er ion implantation, and CO2 laser reflow. Erbium is either preimplanted in the SiO2 base material or postimplanted into a fully fabricated microtoroid. Three-dimensional infrared confocal photoluminescence spectroscopy imaging is used to determine the spatial distribution of optically active Er ions in the two types of microtoroids, and distinct differences are found. Microprobe Rutherford backscattering spectrometry indicates that no macroscopic Er diffusion occurs during the laser reflow for preimplanted microtoroids. From the measured Er doping profiles and calculated optical mode distributions the overlap factor between the Er distribution and mode profile is calculated: Γ=0.066 and Γ=0.02 for postimplanted and preimplanted microtoroids, respectively. Single and multimode lasing around 1.5 μm is observed for both types of microtoroids, with the lowest lasing threshold (4.5 μW) observed for the preimplanted microtoroids, which possess the smallest mode volume. When excited in the proper geometry, a clear mode spectrum is observed superimposed on the Er spontaneous emission spectrum. This result indicates the coupling of Er ions to cavity modes.