The present paper investigates the Faraday effect and absorption and luminescence spectra of single-crystal TbF3 measured at 90 K and 300 K. The optical-quality single-phase TbF3 crystals (structural type β-YF3) were grown by the Bridgman technique. Faraday rotation angles were measured at remagnetization along the [100] crystallographic axis. Low temperature optical measurements were carried out along the [100] axis. “Quasi-doublet” sublevels with energy at 0 cm-1, 65 cm-1 and 190 cm-1, and also a singlet sublevel with energy at 114 cm-1 located in the ground 7F6 multiplet were determined from the low temperature luminescence spectra. The Van-Vleck behavior of the magnetic susceptibility χb can be satisfactorily explained by the magnetic mixing of wave functions belonging to the ground and first excited “quasi-doublet” sublevels at 0 and 65 cm-1, respectively. Analysis of the oscillation dependences of the rotation angle showed that the value of the natural birefringence (Δn ≈ 0.0186) remains nearly constant within the wavelength and temperature ranges under investigation. As the temperature decreases, we find significant increases in the oscillation amplitude of the rotation angle and in the Verdet constant V. The spectral dependences V(χ) are linear throughout the temperature range. The magnetooptical activity of TbF3 can be explained by means of the spin- and parity-allowed electric-dipole 4f→5d transitions in the Tb3+ ions.