Volume　holography　is　promising　for　devices　such　as　wavelength　filters.　However,　in　previously　reported　work　with　these　holographic　devices　the　diffraction　efficiency　and　wavelength　selectivity　were　not　so　satisfactory,　which　affected　the　insertion　loss　and　channel　spacing　of　the　device　respectively.　In　order　to　investigate　the　performances　for　most　of　the　volume　holographic　devices　which　are　of　finite　size　and　with　90　degree　geometry,　two-dimensional　(2-D)　coupled-wave　theory　is　more　accurate　than　that　based　on　the　well-known　Kogelnik＇s　coupled-wave　theory.　In　this　paper　a　close-form　analytical　solution　to　2-D　coupled　wave　theory　for　2-D　restricted　gratings　is　presented　firstly.　Then　in　order　to　achieve　the　optimum　insertion　loss　and　channel　spacing　for　dense　wavelength　division　multiplexing　(DWDM)　filters,　diffraction　properties,　especially　effects　of　the　grating　strength　and　grating　size　ratio　on　the　peak　diffraction　efficiency　and　wavelength　selectivity　are　researched　based　on　the　2-D　coupled-wave　theory　and　its　solution.　The　results　show　that　this　solution　is　capable　of　design　optimization　of　volume　holographic　gratings　for　various　devices,　including　wavelength　filters.　And　the　design　optimization　is　given　in　order　to　gain　the　optimum　peak　diffraction　efficiency　and　wavelength　selectivity.　Finally,　some　experimental　results　showing　the　angular　selectivity　for　different　grating　size　ratio　are　given,　which　agree　well　with　the　2-D　coupled-wave　theory.