Short time Fourier transform (STFT) is usually used to demodulate the interferometric signal and image reconstruction for time domain optical coherence tomography (OCT). STFT algorithm is simple, but cannot obtain good de-noising performance when the interferometric signal is demodulated. Therefore an additional de-noising in two-dimensional (2D) image domain is needed for reconstructed image. This method is time-consuming and incompact. In this paper, one-dimensional (1D) wavelet transformation (WT) was applied to demodulate signal and image reconstruction, furthermore, de-noise in wavelet domain could be completed at the same time. The interferometric signal was decomposed into different frequency ranges by WT and reconstructed only with these filtered coefficients whose frequency range covers the modulating frequency. After demodulating, tomographic image of sample could be reconstructed. Comparing with STFT followed by image de-noising, this method is more compact and efficient. Combining advanced de-noising technique in wavelet domain, this method has great potential in application.