We produce a general formalism to study the interband dynamical optical conductivity in the nonlinear regime of graphene in the presence of a quantum bath comprising phonons and electrons. When a quantum solid of graphene is subjected to an intense electric field in the optical frequency range, the observation of a nonlinear response is facilitated by formulating a quantum master equation of the density operator associated with the Hamiltonian encapsulated in a spin-boson model of dissipative quantum statistical mechanics. Our results reveal the nonlinear steady-state regime’s population inversion and decoherence. The present method enables us to investigate further the nonlinear interband optical conductivity of pristine and gapped graphene characterized by a single dimensionless parameter at finite temperatures. Different bath spectra’ effects on phonons and electrons are examined in detail. The temperature dependence of conductivity reveals that changing temperature can enable us to make a transition from the linear to the nonlinear regime for fixed optical field parameters. Interestingly, a fascinating switching-like behavior is observed for the low-temperature optical conductivity of the gapped graphene while we vary the energy gap as well as the frequency of the externally applied field. Although our general formulation can address a variety of nonequilibrium responses of the two-band system, it also facilitates a connection with the phenomenological modeling of nonlinear optical conductivity.