Abstract Exciton reflectance, magnetooptical Faraday effect and magnetic susceptibility of CdTe single crystals doped with Eu, Gd, Dy rare earth elements and Cd 1− x Dy x Te solid solutions have been studied. The largest enhancement of the Faraday rotation near the fundamental absorption edge has been found for case of dysprosium. At liquid helium temperature the Verdet constant of CdTe:Dy with dopant concentration about 10 20 cm −3 is two order larger than the values for pure CdTe. Negative sign of the Faraday rotation at room temperature and the temperature dependence of magnetic susceptibility suggest of paramagnetic behavior for this material. The features in spectral, concentration, temperature and magnetic field dependence of the Faraday effect have been revealed which give evidence for strong spin exchange interaction between f electrons of rare earth ions and s, p band carriers of CdTe:Dy and Cd 1− x Dy x Te crystals. In contrast, there are no experimental evidences for a such kind of exchange interaction in CdTe doped with Eu and Gd.