Optical control of magnetization using femtosecond laser without applying any external magnetic field offers the advantage of switching magnetic states at ultrashort time scales. Recently, all-optical helicity-dependent switching (AO-HDS) has drawn a significant attention for potential information and data storage device applications. In this work, we employ element and magnetization sensitive photoemission electron microscopy (PEEM) to investigate the role of heating in AO-HDS for thin films of the rare-earth transition-metal alloy TbFe. Spatially resolved measurements in a 3–5 μm sized stationary laser spot demonstrate that AO-HDS is a local phenomenon in the vicinity of thermal demagnetization in a ‘ring’ shaped region. The efficiency of AO-HDS further depends on a local temperature profile around the demagnetized region and thermally activated domain wall motion. We also demonstrate that the thickness of the film determines the preferential switching direction for a particular helicity.