We study the ultrafast photoexcitation dynamics in PBDTTT-C-T (P51, poly(4,8-bis(5-(2-ethylhexyl)-thiophene-2-yl)-benzo[1,2-b:4,5-b′]dithiophene-alt-alkylcarbonyl-thieno[3,4-b]thiophene)) film (~100 nm thickness) and PBDTTT-C-T:PC71BM (P51:PC71BM, phenyl-C71-butyric-acid-methyl ester) nanostructured blend (∼100 nm thickness) with/without DIO(1,8-diiodooctane) additives with sub-10 fs transient absorption (TA). It is revealed that hot-exciton dissociation and vibrational relaxation could occur in P51 with a lifetime of ~160 fs and was hardly affected by DIO. However, the introduction of DIO in P51 brings a longer lifetime of polaron pairs, which could make a contribution to photocarrier generation. In P51:PC71BM nanostructured blends, DIO could promote the Charge Transfer (CT) excitons and free charges generation with a ~5% increasement in ~100 fs. Moreover, the dissociation of CT excitons is faster with DIO, showing a ~5% growth within 1 ps. The promotion of CT excitons and free charge generation by DIO additive is closely related with active layer nanomorphology, accounting for Jsc enhancement. These results reveal the effect of DIO on carrier generation and separation, providing an effective route to improve the efficiency of nanoscale polymer solar cells.