Circularly polarized x-rays from a synchrotron light source were used in 2p core-level photoemission from thin (24 monolayer) fcc Fe films on a Cu(001) substrate. The exchange splitting of this level is resolved by varying the relative orientation of the photon helicity and sample magnetization from parallel to antiparallel. The intensity asymmetry and line-shape variations for parallel and antiparallel orientations are consistent with optical selection rules. Interestingly, the measured exchange splitting for the 3s and 2p levels in these films is reduced from that measured in bulk iron reflecting differences in local bonding and d-band configurations for bulk and thin-film structures. © 1992 The American Physical Society.