Single crystals of Bi2TeO5, both undoped and doped with transition‐metal‐ion dopants, were grown with high optical quality. Continuous‐wave four‐wave‐mixing experiments on these crystals show a strong photorefractive signal with a multicomponent decay. The photorefractive efficiency was studied as a function of the wavelength, intensity, polarization direction, and crossing angle of the laser write beams, and the sample orientation. Both absorption and phase gratings were observed with their relative strengths dependent on the laser wavelength and sample dopants. The signal evolves in time from a defect population grating, to trapped charge gratings involving two different types of traps, to fixed gratings produced by oxygen ion displacements. The photorefractive effect in this material is found to be of the photoconductive type and it produces a larger diffraction efficiency than that observed in sillenite materials under the same experimental conditions. A mechanism is proposed for the various physical processes leading to the different decay components of the signal.