We theoretically study the interplay between magnetism and a heavy Fermi liquid in the AB-stacked transition metal dichalcogenide bilayer system, MoTe2/WSe2, in the regime in which the Mo layer supports localized magnetic moments coupled by interlayer electron tunneling to aweakly correlated band of itinerant electrons in the W layer. We show that the interlayer electron transfer leads to a chiral Kondo exchange, with consequences including a strong dependence of the Kondo temperature on carrier concentration and anomalous Hall effect due to a topological hybridization gap. The theoretical model exhibits two phases, a small Fermi surface magnet and a large Fermi surface heavy Fermi liquid; at the mean-field level, the transition between them is first order. Our results provide concrete experimental predictions for ongoing experiments on MoTe2/WSe2 bilayer heterostructures and introduces a controlled route to observe a topological selective Mott transition.
