Photothermal grating spectroscopy is applied to study the nongeminate atom recombination of photodissociated iodine in liquids. A theoretical model is developed to describe the time dependence of diffraction signals. The excitation intensity dependence of diffraction from the anharmonic thermal grating, created by saturated optical absorption, is used to estimate the quantum yield of the photodissociation, which is critical to determine the number of iodine atoms produced and hence to the recombination rate. The rate constant of nongeminate atom recombination is extracted from the dependence of the time-resolved photothermal diffraction signals on the atom concentration. From the relative amplitudes of the diffraction transients, we can also derive the enthalpy of the recombination reaction.