We discuss the impact of spatial coherence on the defocusing properties of a retinal projection display. The paper demonstrates that there is an optimum degree of spatial coherence that significantly increases the depth of focus as compared with a fully incoherent or a fully coherent illumination. To this end, a theoretical analysis of the effect of light coherence on image contrast is presented and the influence of coherence effects on image quality is discussed. Measurements of both the contrast function (CF) and the text readability when defocusing are presented using a bench model of the display system. The text readability is evaluated using a combination of objective image quality criteria and human experiments. The results reveal that for reading text targets the best depth of focus can be achieved not by fully coherent illumination, but by partially coherent light of a spatial coherence level σ between about 0.35 and 0.5. Further, it is shown that the optimum σ level depends slightly on the targeted text size. © 2004 Society of Photo-Optical Instrumentation Engineers.