Iterative process of error-reduction algorithm is anlyzed, the phase-only object function is obtained when the amplitude of object function and the amplitude of its Fourier transformation are known, and the amplitude and phase of object function are retained as much as possible. The binary coding of cosine is presented to generate binary hologram, and namely transmittance of hologram is 0 or 1 . The phase-only hologram is reconstructed via digital micromirror device (DMD ) hologram display system, and the result proves the effect of reconstruction. The diffraction efficiency of digital micromirror device is analyzed theoretically, and the diffraction efficiency is only related to the ratio of interval size and side length of digital micromirror device. The binary coding of cosine eliminates zeroth order diffraction theoretically, and can generate high pixel hologram.