Two-wave mixing (TWM) in nematic liquid crystals (LC) doped with azo-dyes and chiral agents that induce an helical structure is studied. Photo-induced changes of the cholesteric liquid crystal reflective band-gap are observed. The photo-induced spatial modulation of the chiral structure shows relatively fast response time and large nonlinearity. We have characterized the dependency of the nonlinear gain function on the different experimental parameters. It is also shown that the group velocities of light pulses can be decelerated dramatically in dye-doped cholesteric liquid crystal through TWM performed with a continuous pump and a time modulated signal. The highly dispersive properties of the medium can be exploited in interferometric sensors.