Two-step phase-shifting based on wavelet transform to suppress bias term is reported, and the initial image is used to eliminate background noise. Specific forms of reconstructing hologram and suppressing bias term are given. An incoherent digital holographic microscopy system based on spatial light modulator is built and the holograms and reconstruction results of both three-step phase-shifting and two-step phase-shifting are given. Reconstruction results of the two methods are compared. Experiment captures two holograms of the microscopic fluorescent beads which realize digital reconstruction in different planes using the method presented in this paper. Two-step phase-shifting significantly enhances imaging speed compared to three-step phase-shifting, and provides the possibility to image 3D living cells dynamically. The result shows that wavelet transform can suppress bias term more effectively. We improve the quality of reconstructed image by two-step phase-shifting without increasing the phase-shifting step.