Absolute difference measurement (ADM) is introduced into joint transform correlator (JTC) for optical gray-scale image matching. Using a novel cycle encoding method, ADM is performed on a JTC in one step. With a high-level thresholding value, the correct justification can be achieved from the correlated resultant image. The value of thresholding should be changed according to the different situation of noise disturbing so that it can improve the distortion-invariant ability of the JTC system. The simulation results are given.