A wavelet transform is used to transform data so as to improve discrimination between objects for classification. The wavelet transform is implemented in optics using the Fourier transform of the wavelets. Further, the wavelet chosen has a Fourier transform that is real and positive to avoid the use of holographic techniques. An optical setup is described in which an electronic analog sensor signal drives an acousto-optic cell that controls the intensity of an argon laser. A mechanical scanner writes the information as a line onto a spatial light rebroadcaster module containing an optical liquid crystal light valve. A lens system expands the line into a 2-D array. A real positive Fourier transform wavelet filter is placed in the Fourier transform plane of a 4-f correlator. An optical demonstration shows the formation of a wavelet transform and agreement with computer simulations. An approximation of the inverse wavelet transform is possible using only a real filter, and this is demonstrated in an optical experiment.