Magneto-optic effects are demonstrated to be an effective method for light modulating with an external magnetic field. A novel thermally induced switching mechanism is introduced for manipulating magneto-optical Faraday and Kerr rotations in the terahertz (THz) range. The innovative design consists of a composite of Vanadium dioxide (VO2) and graphene layers, which involves a MgO defect layer positioned on top of a graphene sheet sandwiched between dual Bragg reflectors, all mounted on a VO2 layer. This unique configuration allows for switchable and enhanced magneto-optical responses in transmission and reflection geometries stemming from the temperature-dependent semiconductor-to-metal transition of the VO2 layer. The magneto-optical properties of the switching structure were analyzed using the transfer matrix method, revealing the emergence of a mode within the 2–3 THz range at temperatures of 300 K and 350 K. At 300 K, this mode displays significant transmission with an absolute Faraday rotation angle of approximately 15.26˚ and minimal reflection. Upon increasing the temperature to 350 K, the mode shifts to a reflective state at the same frequency, exhibiting negligible transmission and a Kerr rotation angle of approximately 44.18˚. Furthermore, the switching mode remains stable for both s- and p-polarizations for incidence angles near normal. Importantly, the thickness of the defect layer plays a crucial role in determining the position and intensity of the switching mode. This thermally controlled switching structure is important for advancing and implementing optoelectronic devices, offering valuable insights for designing and optimizing multifunctional systems.