The invention discloses a digital holography reconstruction method based on an iterated denoising shrinkage-thresholding algorithm. The method comprises the following steps of 1, reading an original image, and acquiring diffraction light complex amplitude O(x, y) by using object light information of the original image, wherein the amplitude of the original image is O<0>(Xi, Eta); 2, intervening the diffraction light complex amplitude O(x, y) obtained through fresnel diffraction and reference light R(x, y) added with o and Pi second phase shift quantity to separately achieve light wave complex amplitude U<1>(x, y)/U<2>(x, y) on a holographic plate, laminating the two holographic images I<(1)> and I<(2)> to form a phase shift holographic image I-bar (x, y), constructing a sensing matrix A, and allowing y=Pi I-bar=Pi RO=AO, wherein Pi is a known measurement matrix, R is a spare basis matrix, and y expresses obtained observation data; and 4, figuring out and acquiring a reconstructed image of the original object by using the iterated denoising shrinkage-thresholding algorithm (IDNST). On the basis of TwIST algorithm, dual shrinkage of a threshold value and a regularization parameter are introduced to the IDNST algorithm, the signal-to-noise ratio can be improved, moreover, the convergence speed is increased, the reconstruction precision is improved, and the reproduction quality reaches a more excellent level.