The fabrication and characterization of loss-compensated dispersion-engineered nonlinear As(2)S(3) on Er:TeO2 waveguides is reported for the first time, to the best of our knowledge. The hybrid waveguide is a strip loaded structure made from an Er-doped TeO2 slab and an etched As(2)S(3) strip. Almost complete loss compensation is demonstrated with 1480 nm pumping and a fully lossless waveguide with high nonlinear coefficient can be achieved with higher 1480 nm pump power.