One-dimensional Mott insulators exhibit giant nonlinear optical response. Based on the dynamical density matrix renormalization group method, photoexcited states and optical response in the insulators are studied as functions of the on-site and the nearest neighbor Coulomb interactions, U and V , respectively. We find that the lowest optically allowed and forbidden excited states across the Mott gap, which have odd and even parities, respectively, are degenerate for V /t < ∼ 2 with t being the hopping integral of an electron between nearest neighbor sites. For V /t > ∼ 2, the bound states with odd and even parities occur and are not degenerate. The nature of the degeneracy and its effect on the optical response are examined.PACS numbers: 71.10. Fd, 72.80.Sk, 78.30.Am In one-dimensional Mott insulators with strong onsite Coulomb interaction U , the ultrafast and gigantic nonlinear optical response have been observed [1,2]. The third-order nonlinear susceptibilities in the typical one-dimensional Mott insulators of charge transfer type, such as cuprates and halogen-bridged Ni-halides, are a thousand times larger than those of band insulators or Peierls insulators [2]. In the previous theoretical investigations [3,4], it has been pointed out that the anomalous enhancement of the nonlinear susceptibilities in the onedimensional Mott insulators originates in the large transition dipole moment between an optically allowed state with odd parity and an optically forbidden (two-photon allowed) state with even parity due to the degeneracy of these states.In the large-U limit, only the charge degree of freedom survives in the photoexcited states due to the spincharge separation [5], and the system is well described by an effective two particle model, called the holon-doublon model, which is composed of a holon representing one photoinduced empty site and a doublon representing one doubly occupied site with the attractive Coulomb interaction −V between them. When V exceeds a critical value V = 2t, these paricles form an excitonic bound state [6]. Since these two particles cannot exchange each other, the photoexcited states with odd and even parities are degenerate regardless of the magnitude of V . By using this model, the experimentally obtained optical spectra for the cuprates have been analyzed. However, the optical gap in the compounds is finite (∼ 2 eV) and thus the holon-doublon model, which is obtained in the limit of large U , may be re-examined. Under a finite-U condition, there is an intermediate process that these particles recombine, while this process is prohibited in the large-U limit. Since, in the finite-U condition, these particle can exchange their positions through the intermediate process, the eigenenergies of the odd-and even-parity states * Electronic address: matsueda@imr.tohoku.ac.jp may be different. Therefore, it is indispensable to clarify the optical response in Mott insulators with finite U .The minimal model to describe photoexcitation in the Mott insulators is the single-band extended Hubba...