The dynamics of product vibrational deactivation and subsequent geminate recombination of diiodide ions with atomic iodine following 400-nm photolysis of triiodide in ethanol solution has been studied using femtosecond transient absorption spectroscopy. The excess vibrational energy of the diatomic product was found to decay on two distinct time scales. An ultrafast subpicosecond component, which accounts for the dissipation of most of the energy that is initially deposited into fragment vibrations, is followed by thermalization near the bottom of the I-2(-) potential on a time scale of several picoseconds. The former process is associated with recoil of the fragments in the exit channel of the potential energy surface relevant to bond breakage whereas the latter process represents relaxation in the asymptotic lin;it where interaction between the atom-diatom fragments becomes negligible. Transient product vibrational distributions are determined for delay times larger than the dephasing time of nuclear coherences in the diiodide product ions, thereby providing new information about the mechanism for bond fission. These product distributions are translated into energy-time profiles which are analyzed by a master-equation approach using various model functions for the power spectrum of solvent forces acting on the I-2(-) vibrational coordinate. The dynamics of geminate recombination are found to exhibit a strongly nonexponential character and are interpreted with a simple diffusion model that takes the initial stages of bond breakage and recoil of the fragments into account.