Diffuse optical tomography is modelled as an optimization problem to find the absorption and scattering coefficients that minimize the error between the measured photon density function and the approximated one computed using the coefficients. The problem is composed of two steps: the forward solver to compute the photon density function and its Jacobian (with respect to the coefficients), and the inverse solver to update the coefficients based on the photon density function and its Jacobian attained in the forward solver. The resulting problem is nonlinear and highly ill-posed. Thus, it requires large amount of computation for high quality image. As such, for real time application, it is highly desirable to reduce the amount of computation needed. In this paper, domain decomposition method is adopted to decrease the computation complexity of the problem. Two level multiplicative overlapping domain decomposition method is used to compute the photon density function and its Jacobian at the inner loop and extended to compute the estimated changes in the coefficients in the outer loop. Local convergence for the two-level space decomposition for the outer loop is shown for the case when the variance of the coefficients is small.