Time-resolved photoluminescence and four-wave mixing techniques have been combined for studies of carrier relaxation dynamics in a highly photoexcited GaN epilayer. For a moderate excitation density below 1 mJ/cm 2 , carrier recombination was due to free carrier capture by deep traps. The characteristic time of carrier capture, τ e = 550 ps, was measured under deep trap saturation regime. The ambipolar diffusion coefficient for free carriers, D = 1.7 cm 2 /s, was estimated from the analysis of the transients of the light-induced gratings of various periods. A complete saturation of the four-wave mixing efficiency was observed for the excitation energy density exceeding 1.5 mJ/cm 2 . The latter saturation effect was shown to be related to electron-hole plasma degeneration, which results in a significant enhancement of carrier recombination rate due to onset of stimulated emission.