The wavelet analysis provides an efficient tool in numerous signal-processing problems and has been implemented in optical processing techniques, such as in-line holography. When the diffraction pattern recorded on a hologram is analyzed by means of a wavelet transform, the 3-D location of small particles can be determined very accurately. The diffraction process can, in fact, be interpreted as a convolution with a family of wavelet functions, or, merely, as a wavelet transform. The scale parameter of the wavelet family is related to the axial distance z that the wave propagates. The original field is then reconstructed by searching for the optimum value of the scale parameter which produces a maximum of the wavelet transform modulus. The technique proposed is implemented and experimental results are presented. (C) 2000 Elsevier Science Ltd. All rights reserved.