Rh doped potassium niobate single crystals are grown by the high-temperature solution growth (HTSG) method with a melt doping level of 1500 mg/g. The crystals are reduced to different levels by subjecting them to an in situ high-temperature reduction under an oxygen-deficient atmosphere followed by fast cooling. The characterization results indicate a segregation coefficient of slightly less than 1% for rhodium. The high-resolution X-ray diffraction studies reveal only a slight broadening for reduced crystals, indicating that the reduction process does not deteriorate strongly the crystalline perfection. Loss of an oxygen atom by formation of an oxygen vacancy accompanied by releasing two electrons is identified as the most likely defect mechanism for the reduction, which results in a lower valence of Rh in the lattice and appears a strong change in the absorption spectrum. The reduction is also accompanied by a loss of hydrogen that leads to a decrease of the infrared (IR) vibrational bonds associated to the OH complex. Two-wave mixing measurements show that majority charge carriers for highly reduced crystals change from holes in unreduced crystals to electrons in reduced crystals at longer wavelength (>580 nm).