Diffraction characteristic of a two-dimensional (2D) grating light modulator is analyzed with scalar diffraction theory, the optical analysis method of the projection system based on grating light modulator is proposed. The processing is simulated with Matlab software. Diffraction light distribution of the 2D modulator is the coherent superposition of diffraction light distribution of modulators, and the distribution is similar to that of a single modulator. The diffraction light can be divided and imaged by the projection lens based on the anti-Fourier transform process. If the first-order diffraction light is used as the projection light, the modulator with 2kπ phase difference shows a bright pixel in the image plane, but the modulator with (2k-1)π phase difference shows a black pixel. A projection system based on a static micro-electromethanical system (MEMS) grating light modulator array was setup, and a static image is gotten. The result proves the feasibility of grating light modulator for projection display.