The basic concept and procedure of digital in-line holography are shown mainly for particle diameter measurement. The result of the reconstructed image and the particle diameter measurement are affected by some recording parameters, i.e. recording distance, particle density, the size of CCD chip and the pixel size, etc. These recording parameters may even determine the success or failure of the measurement. Two parameters, recording distance and particle density, are mainly discussed for particle diameter measurement through computer simulation. The range of recording distance is given by formula. Simultaneously, a kind of method for particle diameter measurement based on gray gradient by extracting particle edge is put forward and verified by experiment.