We implemented a fully-3D ordered-subsets expectation-maximization (OSEM) algorithm with attenuation compensation, distance-dependent blurring (DDB), and sensitivity modeling for SPECT performed with a cone-beam collimator (CBC). The experimentally obtained detector response to point sources across FOV was fitted to a two-dimensional Gaussian function with its width (FWHM) varying linearly with the source-to-detector distance and with very weak sensitivity dependence on the emission angle. We obtained CBC SPECT scans of a physical point-source phantom, a Defrise phantom, and a female patient, and we investigated performance of our algorithm. To correctly simulate DDB and sensitivity, a blurring kernel with a radius of up to 10 elements had to be used for a 128x128 acquisition matrix, and volumetric ray tracing rather than line-element-based ray tracing has to be implemented. In the point-source phantom reconstruction we evaluated the uniformity of FWHM for the radial, tangential and longitudinal directions, and sensitivity vs. distance. An isotropic and stationary resolution was obtained at any location by OSEM with DDB and sensitivity modeling, only when volumetric ray tracing was used. We analyzed axial and transaxial profiles obtained for the Defrise phantom and evaluated the reconstructed breast SPECT patient images. The proposed fully-3D OSEM reconstruction algorithm with DBB and sensitivity modeling, and attenuation compensation with volumetric rays tracing is efficient and effective with significant resolution and sensitivity recovery.