Transient anisotropy experiments on the triiodide photodissociation reaction in liquid solution are presented for excitation with 30-fs, 400-nm optical pulses. The decay of the spatial diatomic fragment distribution that is initially created through the process of bond fission occurs on three distinct time scales. On an ultrashort time scale well below 1 ps, an inertial contribution can clearly be distinguished. The corresponding Gaussian decay is described by correlation times around 450 fs. This ultrafast component reflects substantial rotational excitation of the diatomic product which results from impulsive photodissociation of the parent molecule. The contribution of the bending coordinate to the reaction mechanism in Liquid solution is emphasized using a simple impulsive model for rotational excitation of the diatomic fragment. An intermediate time scale is characterized by an additional exponential contribution to the anisotropy decay with time constants around 2 ps and coincides with the time scale for vibrational relaxation of the diatomic fragment. On even longer times scales, rotational diffusion of the diatomic fragment governs the anisotropy decay with typical time constants of about 12 ps. A pronounced probe wavelength dependence of the rotational diffusion time constant is explained by an effective hydrodynamic volume that is detected by the probe pulse and originates from the anharmonicity of the diiodide potential. Finally, nuclear coherences at the diiodide vibrational frequency are observed in the inertial decay of the anisotropy. This novel effect is speculated to arise from a coupled motion of the system along all possible bending and stretching coordinates.