The multi-wavelength dividing element is a key element in wavelength division multipler (WDM) system. Phase-only diffractive optical element (PDOE) used as WDM element has many merits, such as easy coupling, polarization insensitivity, low cross-talk and simple structure. For the design of binary optical WDM element, the angular dispersion analysis is needed. Based on the phase binary equation, the angular dispersion and the thermal angular dispersion analysis are proposed in this paper. And the theoretical expressions of dispersion and thermal dispersion have been given after the analysis. Using the results of this theory, the destination value of Yang-Gu (Y-G) algorithm is selected, and the binary optical WDM element is also designed. The angular dispersion simulation based on Fresnel diffraction has been proceeded. The numerical simulation results validate the theoretical results.