Light induced grating experiments have been performed at room temperature in CdS nanocrystallites of 2.5 nm radius embedded in sol-gel glass films of different semiconductor volume concentration. The dynamics of the photogenerated carriers at the lowest transition peak has been shown to depend on the excitation intensity. No spatial diffusion is observed up to a nanocrystallite volume concentration of 35&percent;. Below a fewMW/cm2the carriers relax in each nanocrystallite, either radiatively in ∼150 ps or by trapping the electrons 15 meV below their excitation transition. For higher intensities of excitation, a saturation of the excited states occurs which allows the electrons to be trapped in the glass matrix, inducing a permanent grating by the creation of a static electric field. ©1997 American Institute of Physics.