One consequence of strong spatial confinement of electronic wave functions in ultrasmall semiconductor nanocrystals is a great enhancement of carrier-carrier interactions, which has a dramatic effect on the spectral and dynamical properties of both single and multiexciton states. Strong carrier-carrier interactions open new nanocrystal-specific energy relaxation and recombination channels associated, e.g., with electron-hole energy transfer and ultrafast nonradiative Auger recombination. Further, they lead to extremely efficient direct photogeneration of multiple electron-hole pairs (excitons) by single photons known as carrier (or exciton) multiplication. This review focuses on the effect of Coulomb interactions on carrier recombination and photogeneration mechanisms in nanocrystals based on II-VI (e.g., CdSe) and IV-VI (e.g., PbSe) compounds. The specific topics discussed here include the fine structure of the band-edge optical transitions and its effect on temperature-dependent single-exciton recombination dynamics, Auger recombination of multiexcitons in size- and shape-controlled nanocrystals with a specific emphasis on optical-gain properties of nanocrystalline materials (including quantum rods and multicomponent core-shell heterostructures), and the direct generation of multiple excitons via carrier multiplication and its implications in photovoltaic technologies.