Plasma-induced damage often reduces the electrical and optical performance and the lifetime of compound semiconductor devices. We have investigated the effect of oxygen and methane reactive ion etching plasma on the electrical characteristics of nominally undoped GaN/Al0.25Ga0.75N/GaN high mobility heterostructures on sapphire substrates grown by plasma-induced molecular beam epitaxy and metalorganic chemical vapor deposition (MOCVD). The electrical transport properties of the two-dimensional electron gas in the AlGaN/GaN heterostructures were investigated by a combination of capacitance-voltage profiling and Hall effect measurements. The performance degradation of the heterostructures is attributed to the reduction of the carrier density and mobility due to ion bombardment, which is causing a creation of surface and deep acceptor states. After rapid thermal annealing (RTA) at temperatures between 400 degrees C and 800 degrees C, the electrical properties of the heterostructures exposed at moderated plasma power density and bias were mostly recovered. However, samples exposed at high power density lost the significant part of the electron sheet carrier concentration unrecoverable even after RTA at 800 degrees C.