Abstract: The most popular application of holography is using the technique to make three-dimensional images. This paper describes an algorithm for computationally generating holograms along with methods to fabricate the hologram. The phrase, “digital holography", is common place in the optics community; it describes the methods used to reconstruct holographic images from physically recorded holograms as well as the methods used to construct holograms from virtual objects using a computer. In fact we have the ability to create digital holograms from imaginary objects and then recreate the image of those objects using the same digital holograms, the entire process performed on a single computer. A computer simulation technique for generating Fourier holograms using the Fraunhoffer diffraction formula is applied. These generated Fourier holograms were analyzed for experimental reconstruction. A detailed analysis was done on the computation and numerical reconstruction. Filtering technique was used to analyze its feasibility to be used in image processing. Corresponding reconstructions were verified by MATLAB for computer simulation. The algorithm of the MATLAB program is discussed. Using this technique, computer generated holograms can be of great use in image processing field.