We present a theoretical formalism for three dimensional (3D) imaging properties of digital holographic microscopy (DHM). Through frequency analysis and visualization of its 3D optical transfer function, an assessment of the imaging behavior of DHM is given. The results are compared with those from other types of interference microscopy. Digital holographic microscopy does not result in true 3D imaging. The main advantage of holographicmicroscopy lies in its quick acquisition of a single 2D image. Full 3D imaging can be obtained with DHM using a broad-band source or tomographic reconstruction.