Cs2AgBiBr6 is a promising metal halide double perovskite offering the possibility of efficient photovoltaic devices based on lead-free materials. Here, we report on the evolution of photoexcited charge carriers in Cs2AgBiBr6 using a combination of temperature-dependent photoluminescence, absorption and optical pump–terahertz probe spectroscopy. We observe rapid decays in terahertz photoconductivity transients that reveal an ultrafast, barrier-free localization of free carriers on the time scale of 1.0 ps to an intrinsic small polaronic state. While the initially photogenerated delocalized charge carriers show bandlike transport, the self-trapped, small polaronic state exhibits temperature-activated mobilities, allowing the mobilities of both to still exceed 1 cm2 V–1 s–1 at room temperature. Self-trapped charge carriers subsequently diffuse to color centers, causing broad emission that is strongly red-shifted from a direct band edge whose band gap and associated exciton binding energy shrink with increasing temperature in a correlated manner. Overall, our observations suggest that strong electron–phonon coupling in this material induces rapid charge-carrier localization.