We study the role of spin correlations in nonlinear absorption due to optical transitions from a deep impurity level to states above a Fermi sea. We demonstrate that the Hubbard repulsion between two electrons occupying the impurity state leads to a logarithmic divergence of the third-order nonlinear optical susceptibility at the absorption threshold. This divergence is a manifestation of the Kondo physics in the nonlinear optical response of Fermi sea systems. Remarkably, the light-induced Kondo temperature, which governs the shape of the Kondo-absorption spectrum, can be tuned by varying the intensity and frequency of the pump optical field. We also show that, for off-resonant pump excitation, the pump-probe spectrum exhibits a narrow peak below the linear absorption onset.

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