Control over light propagation in a material by applying external fields is at the heart of photonic applications. Here, we demonstrate ultrafast modulation of the optical properties in the room temperature polycrystalline MAPbI3 perovskite using phase-stable terahertz pulses, centered at 20 THz. The biasing field from the THz pulse creates extreme localization of electronic states in the ab plane – Wannier-Stark localization. This quasi-instantaneous reduction of dimensionality (from 3D to 2D) causes a marked change in the absorption shape, enabling the modulation depth to be tens of percent at moderate field strengths (3 MV/cm). The notably low-field onset results from a narrow electronic bandwidth, a large relevant lattice constant, and the coincidence of the two along the same direction in this tetragonal perovskite. We show that the transient optical response is in fact dominated by the least dispersive direction of the electronic band structure, facilitating a substantial modulation despite the arbitrary arrangement of the individual crystallites. The demonstration of THz-field-induced optical modulation in a solution-processed, disordered, and polycrystalline material is of substantial potential significance for novel photonic applications.