The factor, categorization and optical statistical characteristics of laser speckle shown in three-liquid crystal on silicon (LCOS) laser projection display system are studied, and a measuring method of laser speckle is analyzed. According to this, an optical method of rotating diffuser to reduce the composite speckle is applied. Through a series of simulations and experiments, the contrast of speckle patterns is reduced to 4.2%, which is acceptable to people′s eyes. So the method of rotating diffuser effectively suppresses laser speckle, which has simple optical structure and is easy to implement.