Heavily-doped and fully concentrated 2.78% Tb:Y2O3 and Tb2O3 single crystals with high optical quality and very low levels of impurities have been grown and studied for their luminescence and Faraday rotation properties. Absorption, emission and fluorescence decay measurements performed vs excitation wavelength and temperature and their confrontation with Judd-Ofelt and crystal-field calculations show the contributions of two types of luminescent centers: dominant ones with a 5D4 emission lifetime of 23 μs corresponding to coupled near-neighbor Tb3+ ions, all in C2 symmetry sites, and minority ones with a 5D4 emission lifetime of about 2 ms corresponding to coupled Tb3+ ions in C2 and C3i near-neighbor symmetry sites. Faraday rotation measurements confirm Tb2O3 as the Tb-based Faraday crystalline material with the largest ever measured Verdet constant, at all temperatures and from the visible to the near-infrared. They also show that the dominant luminescent centers contribute more particularly to this large Verdet constant thanks to a favorable crystal-field splitting of their 7F6 ground multiplet and also to the contributions of both types of spin-allowed and spin-forbidden 4f-5d absorption bands.