The light diffracted from transient holographic phase gratings has been used to investigate free‐carrier and thermal effects in ZnO. The gratings were optically induced by two‐photon absorption of two interfering optical beams. A sequential appearance of two gratings was observed: one from free carriers and the other from lattice heating. Diffraction efficiencies varied with the fourth power of the intensity of the interfering beams and reached ≈ 10% at the highest intensities.