A new photoinduced phase with interlayer σ bonds was experimentally discovered in a graphite crystal. We theoretically study the mechanism of this nonequilibrium phase transition, in terms of the proliferation of photogenerated interlayer charge transfer (CT) excitations in visible region. At the Franck–Condon state, the resultant electron–hole pair is quite unstable, being easily dissipated into the two-dimensional (2D) electronic continuum as plus and minus free carriers. However, by a small probability, the electron and the hole are bound as an interlayer CT exciton, due to the Coulomb attraction between them. This exciton self-localizes, contracting the interlayer distance and buckling the six membered ring of graphite, only around it. Due to plenty of excitations, interlayer σ bonds are cooperatively formed, and thus a tiny sp3 nanoscale domain appears.