The phenomenon of bi-grating imaging is theoretically studied with Fresnel diffraction theory and Fresnel diffraction formula of plane transmission grating, respectively. The distribution of complex amplitudes of the object waves after passing a system composed of two parallel plane transmission gratings is analyzed. A virtual image of the object is observed clearly behind the second grating under ideal conditions when the positions of two gratings meet special value. The function of the two gratings is analyzed theoretically during the process of bi-grating imaging and the relation formula among the two gratings' spatial frequencies, diffraction wave orders and positions necessary for obtaining bi-grating diffraction imaging is given. The result is satisfied with those of experiments.