The frequency-dependent conductivity and relaxation time of a correlated two-component plasma is calculated. We take into account the short-range correlation effect of the electron-electron, hole-hole, and electron-hole interactions by making use of the effective two-body interaction which is related to the pair correlation function. Our result for the conductivity is given in terms of the density fluctuation of the plasma. However, the present result depends on the dielectric response beyond the random-phase approximation. We take into account the effects of short-range correlations on the screening. Moreover, we consider the effect of the electron-hole short-range correlation on the electron-hole scattering-matrix element. Here we take into account the electron-hole attractive interaction during the scattering process, beyond the Born approximation, as it is commonly used. © 1987 The American Physical Society.