X‐ray magnetic circular dichroism (XMCD) of the Er L absorption‐edges is studied in the Laves phase compound ErFe2 in order to confirm the mechanism proposed: XMCD spectra are dominated by the electric dipole transition from the core 2p states to the magnetically polarized Er 5d states, which are caused by (i) the intra‐atomic exchange interaction of 4f electrons, with the enhancement of the dipole matrix element, as well as by (ii) the hybridization with the spin‐polarized Fe 3d states. In addition, (iii) the electric quadrupole transition contributes appreciably. We point out that one can observe a novel temperature effect on the XMCD spectrum of Er at L2 edge, since it consists of the contributions (i), (ii) and (iii) having a comparable order of magnitude but different signs and temperature dependences. We discuss the resultant temperature dependence of the XMCD spectrum with that recently observed in ErFe2.