We determine the optical response of topological insulator thin films in the presence of a quantizing, external magnetic field. We explicitly take into account hybridization between the states of top and bottom surface. The interplay between hybridization and Zeeman energies gives rise to topological and normal insulator phases and phase transitions between them. The optical response in the two phases and at the phase transition point is investigated. We show that the difference in magneto-optical response can be used to distinguish the topological phase from the normal phase of the system. Further, the optical response also allows us to determine the gap generated by hybridization between top and bottom surface states of topological insulator thin films.