Abstract: Image reconstruction in off-axis terahertz digital holography is complicated due to the harsh recording conditions and the non-convexity form of the problem. In this paper, we propose an inverse problem-based reconstruction technique that jointly reconstructs the object field and the amplitude of the reference field. Regularization in the wavelet domain promotes a sparse object solution. A single objective function combining the data-fidelity and regularization terms is optimized with a dedicated algorithm based on an alternating direction method of multipliers framework. Each iteration alternates between two consecutive optimizations using projections operating on each solution and one soft thresholding operator applying to the object solution. The method is preceded by a windowing process to alleviate artifacts due to the mismatch between camera frame truncation and periodic boundary conditions assumed to implement convolution operators. Experiments demonstrate the effectiveness of the proposed method, in particular, improvements of reconstruction quality, compared to two other methods.