Near‐infrared optical absorption and Faraday rotation have been studied, in addition to the room‐temperature sheet resistance, in a series of magnesium‐doped bismuth substituted lutetium iron garnet (Bi:LuIG) thin films grown by liquid phase epitaxy. Faraday rotation was measured at 1150 and 1300 nm as a function of the MgO concentration in the melt. Optical absorption data indicate valence exchange as a possible mechanism for increased optical absorption at compositions different from charge compensation. Faraday rotation data display a magnesium doping dependent behavior, as do theI‐Vcharacteristics. Additionally, theI‐Vdata of unetched and etched films near compensation suggest a two‐layer structure to the films.