We discuss theoretically the role of intermolecular interaction in the optical properties of C60 solids. Two kinds of intermolecular interaction, namely, electron transfer and Coulomb interaction, are taken into account in terms of an extended Pariser-Parr-Pople model. Configuration-interaction calculations have been carried out for systems of up to four molecules. It is demonstrated that the two kinds of interactions are both important in understanding the optical spectra of C60 solids. The Coulomb interaction is relevant for the overall absorption spectrum in the sense that those states which contribute to the main peaks are essentially Frenkel exciton states. The intermolecular hopping of a singlet exciton is governed by ordinary dipole-dipole coupling. Intermolecular electron transfer among different molecular orbitals leads to the mixing of Frenkel and charge transfer states. These mixed states are responsible for the shoulders on the low and high energy sides of the molecular absorption peak.