The dynamics of band-gap renormalization and gain build-up in monolayer MoTe$_2$ is investigated by evaluating the non-equilibrium Dirac-Bloch equations with the incoherent carrier-carrier and carrier-phonon scattering treated via quantum-Boltzmann type scattering equations. For the case where an approximately $300$ fs-long high intensity optical pulse generates charge-carrier densities in the gain regime, the strong Coulomb coupling leads to a relaxation of excited carriers on a few fs time scale. The pump-pulse generation of excited carriers induces a large band-gap renormalization during the time scale of the pulse. Efficient phonon coupling leads to a subsequent carrier thermalization within a few ps, which defines the time scale for the optical gain build-up energetically close to the low-density exciton resonance.