It is well known that irradiation with intense laser light can lead to nonlinear absorption processes by individual molecules. However, the mutual interaction between two molecules can lead to cooperative nonlinear processes which result in entirely new features in the absorption spectrum. In this paper, the theory of cooperative two-photon absorption is developed using the principles of quantum electrodynamics, and expressions are derived for the rate of cooperative absorption for transitions which are forbidden in the absence of any such interaction. Several different cases are examined in detail, including crystalline or matrix-isolated species, gaseous and liquid mixtures, and van der Waals molecules. It is shown that the cooperative absorption rate can be substantially increased by choosing materials with suitable energy levels where one of several resonance enhancement mechanisms can be exploited. Finally, methods of observation are discussed, and a specific photochemical example is given for the case of a mixture of formaldehyde and deuterioformaldehyde.