Novel planar folding optical correlator is proposed by means of micro-optical and binary optical techniques. The Fourier transform lenses, holographic matched filter, input plane and output plane are integrated on a common planar element. A reflective planar optical system is constructed by the correlator and a planar polarized mirror. The system structure and parameter design of this planar system are described, and a concrete model is proposed, with its volume reduced to about 12 cm3. At last, image recognition process of this correlator is simulated by using Fresnel diffractive method and gains excellent results, which proves the recognition capability of the system.