Bandgap renormalization (BGR), or bandgap narrowing effect, is one of the many-body effects predicted by many-body theory in semiconductor physics. However, pure BGR effect has never been observed experimentally although the mixed effect of BGR with lattice-heating induced bandgap narrowing was reported in GaAs and CdTe semiconductors. PbTe has a positive temperature coefficient of bandgap. Its lattice-heating induced bandgap narrowing can be eliminated so that the pure BGR effect is possibly observed. However, that has never been reported so far because the BGR effect is weak in PbTe due to its huge dielectric screening. We study the ultrafast dynamics of photo-excited carriers in PbTe films using near-infrared femtosecond-resolved transient differential transmission (TDT) spectroscopy. A complex oscillation-like damped decay dynamics is observed. A negative dip, a fingerprint signature of BGR effect, occurs immediately after the thermalization process of the photo-excited carriers. As such, we have observed a pure BGR effect in PbTe for the first time, strongly supporting the many-body theory. Meanwhile, we have also observed a dynamic transition from a transient absorption enhancement to absorption saturation, revealing the emergence of a slow lattice-heating induced bandgap widening via carrier-phonon couplings. Based on a two-temperature model, a simulation computation is carried out, supporting the lattice-heating induced bandgap widening leads to the dynamic transition. A phenomenological dynamic model is developed, including three dynamic components: the thermalization of the photo-excited carriers, recombination of the thermalized carriers and lattice-heating induced bandgap widening, and used to best fit the excitation-power dependent TDT dynamics. Time constants and strengths of the three dynamic components are obtained for different excitation powers. Time constant variation with the excitation power reveals different roles of the carrier–carrier and carrier-phonon scattering in the thermalizing process, as well as of free carrier and exciton recombination in the decaying process of hot carriers.