Frequency-domain diffusion imaging uses the magnitude and phase of modulated light propagating through a highly scattering medium to reconstruct an image of the spatially dependent scattering or absorption coefficients in the medium. An inversion algorithm is formulated in a Bayesian framework and an efficient optimization technique is presented for calculating the maximum a posteriori image. In this framework the data are modeled as a complex Gaussian random vector with shot-noise statistics, and the unknown image is modeled as a generalized Gaussian Markov random field. The shot-noise statistics provide correct weighting for the measurement, and the generalized Gaussian Markov random field prier enhances the reconstruction quality and retains edges in the reconstruction. A localized relaxation algorithm, the iterative-coordinate-descent algorithm, is employed as a computationally efficient optimization technique. Numerical results for two-dimensional images show that the Bayesian framework with the new optimization scheme outperforms conventional approaches in both speed and reconstruction quality. (C) 1999 Optical Society of America [S0740-3232(99)01410-6].