In order to reduce the shrinkage properties of photopolymer material, a photopolymer doped with Mg(OH)2 nanoparticles is fabricated. By using methylene blue trihydrate as photosensitizer, this material is exposed with laser of 647-nm wavelength. The experimental results show that the shrinkage decreases from 3.2% to 1.6% and the diffraction efficiency increases from 75% to 89% and the maximum refractive index modulation reaches 2.24×10-3 when the photopolymer is doped with Mg(OH)2 nanoparticle. The analog image is stored in the material and the reconstructed hologram is still clear. All of the results demonstrate that the incorporation of Mg(OH)2 nanoparticles can improve the holographic characteristics of photopolymer material.