It is an interesting thing to output high quality digital hologram (Computer Generated Hologram) under limited grey level. The reconstructed image quality of digital hologram was studied with adjusting the grey level of hologram, according to its histogram. The grey levels whose ratios were relatively small were cut down, and the grey levels whose ratios were relatively large were expanded. Firstly, the change of diffraction efficiency of digital hologram after grey level adjusting was studied in theory. The diffraction efficiency would be increased while the threshold for grey level adjustment increased. Then the change of Signal to Noise Ratio (SNR) of reconstructed image was analyzed. It is found that the SNR will increase at first and then decrease with the increase of the threshold. The hologram with high diffraction efficiency and high SNR can be obtained if the special threshold for grey level adjustment is selected. The computer simulation and optical reconstruction of digital hologram prove the analysis.