Until recently, the nonlinear interaction between light and matter has been restricted to only low photon energies produced by optical lasers. However, about a decade ago, the rise of free-electron laser facilities revolutionized the field of nonlinear light-matter interaction by delivering intense high-energy light pulses. Today, such lasers are used for research in materials science, chemical technology, biophysical science, solid state physics as well as fundamental research. It is the new experimental possibilities provided by free-electron lasers that motivated the work presented in this thesis. Two-photon ionization process is one of the simplest nonlinear interactions in which absorption of two photons by an atom (or a molecule) leads to promoting one of its bound electrons to continuum. This work presents studies of two-photon ionization of neutral atoms. After a brief historical introduction to the topic of nonlinear light-matter interaction, the density matrix describing the state of an atom and a photoelectron following two-photon ionization is derived. In each successive chapter, part of this density matrix is used to obtain characteristic quantities such as total two-photon ionization cross section, photoelectron angular distributions, ion polarization or degree of polarization of fluorescence photon produced by subsequent decay of the photoion. Physical properties of these quantities are studied and intriguing phenomena, such as elliptical dichroism, polarization transfer as well as relativistic and screening effects are investigated.