The optical and magneto-optical ͑MO͒ spectra of Tm monochalcogenides are investigated theoretically from first principles, using the fully relativistic Dirac linear combination of muffin-tin orbitals band structure method. The electronic structure is obtained with the local-spin-density approximation ͑LSDA͒, as well as with the so-called LSDAϩU approach. In contrast to LSDA, where the stable solution in TmTe is a metal, the LSDAϩU gave an insulating ground state. LSDAϩU theory predicts the thulium ion in TmTe to be in an integer divalent state. It also shows a gradual decreasing of the energy gap with reducing of the lattice constant. LSDAϩU theoretical calculations produce a similar energy band structure in TmS and TmSe, with twelve 4 f bands fully occupied and hybridized with chalcogenide p states. The 14th f hole level was found to be completely unoccupied and well above the Fermi level and a hole 13th f level is partly occupied and pinned at the Fermi level. The occupation number of the 13th f level is equal to 0.12 and 0.27 in TmS and TmSe, respectively ͑valence 2.88ϩ and 2.73ϩ͒. Such an energy band structure of thulium monochalcogenides describes well their measured bremsstrahlung isochromat spectroscopy ͑BIS͒, and x-ray and ultraviolet photoemission spectra as well as the optical and MO spectra. The origin of the Kerr rotation realized in the compounds is examined.