We report a colossal magnetorefractive effect (MRE) in epitaxial thin films of a classical colossal magnetoresistance (CMR) manganite, (La1 − yPry)2/3Ca1/3MnO3 (y = 0.375 and 0.7). Close to the ferromagnetic (FM) phase transition a moderate applied magnetic field, H ∼ 10 kOe, results in a reduction of the optical reflectance by ∼18% for the photon energy E ∼ 2.7 eV. The MRE spectral behavior with three pronounced maxima at E = 1.6, 2.7 and 4.0 eV points out an inter-site nature of the involved optical transitions. The results are discussed within a phase separation scenario with coexisting FM metallic nanodomains antiferromagnetically coupled by correlated polarons. The probability of MRE optical transitions is maximal for antiparallel alignment of Mn3+/Mn4+-spins realized for the coercive field, Hc ∼ 200–800 Oe, and is suppressed by stronger fields, which favor FM metallic behavior. As a result, both the optical reflectivity and the electrical resistance decrease, yielding a close similarity between the CMR and MRE behavior.