Layered semiconductor compound CdI2 has been grown with the Bridgman technique and studied by nonlinear transmittance spectroscopy. The optical absorption in CdI2 shows a nonlinear transmission of the incident laser power (P-0) within a lower power limit. The transmission, however, is found to saturate at high powers, giving a clamped output. The value of the incident power (P-0C) at which clamping starts is also found to depend on the crystal temperature (T-L) The values of P-OC ranges from 55 to 65 MW cm(-2) for T-L = 4.2-180 K. The dynamic range (D-R) as a function of T-L is calculated and the values are found to range from D-R = 2 to 1.6. The optical limiting mechanisms are discussed. The two-photon absorption (TPA) coefficient (beta) of the optical nonlinear process in CdI2 is estimated. The values are found to be within a range from beta = 47 to 25 cm GW(-1) and be decreasing with increasing T-L. As expected for the TPA process, the experimental data within a certain range follows the linear relation: log (P-0/P-T) = A(G) + Omega(P-0 - P-T), where P-T is the transmitted power, A(G) is the absorbance of the ground state and Omega is a constant depending on the absorption cross-section and the relaxation time. The values of A(G) and Omega estimated from the fits to the measured data vary with T-L. The findings resulting from this investigation might have potential applications in optical sensors protection. (C) 2009 Elsevier B.V. All rights reserved.