The photorefractive effect is a phenomenon in which the local index of refraction is changed by the spatial variation of the light intensity. Such an effect was first discovered in 1966. The spatial index variation leads to the distortion of the wavefront, and such an effect was referred to an 'optical damage'. The photorefractive effect has since been observed in many electro-optic crystals, including LiNbO3, BaTiO3, SBN, BSO, BGO GaAs, InP, etc. Photorefractive materials are, by far, the most efficient media for the recording of dynamic holograms. In these media, information can be stored, retrieved and erased by the illumination of light. In addition to the holographic properties, energy coupling occurs between the recording beams and also between the reading beam and the scattered beam. In this Lecture, we first briefly describe the photorefractive effect. The band transport mode is introduced to analyze the process involved in the photo- induced index variation. This is followed by a more detailed analysis of the dynamics of grating formation. We then describe the interaction between electromagnetic waves propagating inside photorefractive media. Nonlinear optical processes including two-wave mixing, four-wave mixing and phase conjugation are discussed. We also point out some fundamental including two-wave mixing, four-wave mixing and phase conjugation are discussed. We also point out some fundamental properties of grating diffraction. Then we demonstrate the applications of the photorefractive effect including volume holographic data storage, image processing, optical interconnections, computing and neural networks. Finally, we discuss some recent developments in photorefractive materials and applications. As an example, we describe an application of photopolymers in a flat-topped tunable filter for optical fiber communication.