Tunable optical properties could expand the functionalities of optoelectronic devices, so exploring materials with tunable optical properties is important for the development of high-performance optoelectronic devices. CuInP₂S₆ (CIPS) is a ferroelectric layered material with a Curie temperature of 315 K. The low phase transition temperature provides the possibility of conveniently modulating the optical properties of CIPS for device applications via temperature control. Here, we study the temperature-tunable photoluminescence (PL) and ultrafast nonlinear absorption of CIPS under ferroelectric–paraelectric phase transition, and reveal the temperature-dependence mechanism from a photoexcited carrier relaxation process. We observe broadband PL emission around 592 nm from defect-states and significant two-photon absorption at 800 nm, and time-resolved PL and transient absorption spectroscopies indicate that the carrier relaxation process consists of rapid intraband scattering, interband nonradiative recombination, charge transfer from the conduction band minimum to defect-bands and subsequent rapid intra-defect-band relaxation and slow defect-state assisted recombinations. As the temperature increases, the PL emission intensity and excitation efficiency decrease significantly due to enhanced nonradiative recombination at defect-states; meanwhile, the two-photon absorption coefficient increases and the carrier relaxation times are unchanged although phonon-scattering enhances the nonradiative recombination process. Our findings reveal the temperature behavior of the CIPS optical response under phase transition and pave the way for designing CIPS-based temperature-tunable optoelectronic devices.