Raman and optical absorption studies under pressure have been conducted on KTb(MoO₄)₂ up to 35.5 GPa. A phase transformation occurs at 2.7 GPa when the crystal is pressurized at ambient temperature in a hydrostatic pressure medium. The sample changes to a deep yellow color at the transition and visibly contracts in theα-axis direction. The color shifts to red on further pressure increase. The Raman spectral features and the X-ray powder pattern change abruptly at the transition indicating a structural change. The pressure-induced transition appears to be a property of the layer-type alkali rare earth dimolybdates. However, the color change at the transition in KTb(MoO₄)₂ is rather unusual and is attributed to a valence change in Tb initiated by the structural transition and consequent intervalence charge transfer between Tb and Mo.In situ high pressure X-ray diffraction data suggest that phase II could be orthorhombic with a unit cell having 3 to 4% smaller volume than that of phase I.