Giant magnetocaloric thin films are promising materials for new generation energy-efficient cooling systems. To investigate the cooling performance of AlFe and AlFeGd alloys, thin films have been deposited onto a glass substrate by thermionic vacuum arc (TVA) deposition system. TVA is a physical vapor deposition technology; it works in high vacuum and low-temperature conditions. AlFe and AlFeGd thin films are of significant importance for giant magnetocaloric materials. The surface and magnetic properties of a magnetic material are strongly dependent on the deposition process. In this paper, the structural, magnetic, and cooling performances of AlFe alloys with and without the Gd element have been investigated. When the Gd elements are added to AlFe alloys, the size of crystallite and the surface morphology of the giant nanometric magnetocaloric thin films are altered. The size of crystallite decreases to a lower value due to the Gd element added. According to the results of the elemental analysis, the elemental ratios of the AlFe and AlFeGd thin films were measured as (87:13) and (84:4:12), respectively, which are different from the ones reported previously. Magnetic cooling performance and magnetization strongly depend on these ratios. The mean values of crystallite size for the AlFe thin film and AlFeGd nanometric giant magnetocaloric thin film were measured as 50 nm and 12 nm, respectively. Following the Curie temperature of AlFeGd thin film, and the temperature difference it produces in the studied magnetic fields, 60 successive units of this material are assumed to form a magnetic refrigeration cycle. The coefficient of performance of this cycle is calculated to be 2.084-nearly two times better than the suggested cascade vapor-compression cycles in the same temperature range. This fact alongside the solid-state and environmentally friendly attributes of magnetic refrigeration cycles makes the AlFeGd thin films a strong candidate for accomplishing an efficient refrigeration system.