Ultrasound (US)-guided diffuse optical tomography (DOT) is a promising low-cost imaging technique for diagnosis and assessment of breast cancer. US-guided DOT is best implemented in reflection geometry, which can be co-registered with US pulse-echo imaging and also minimizes the tissue depth for adequate light penetration. However, due to intense light scattering, the DOT reconstruction problem is ill-posed. In this communication, we describe a new non-linear Born iterative reconstruction method with US-guided depth-dependent sparse regularization for improving DOT reconstruction by incorporating a priori lesion depth and shape information from the co-registered US image. Our method iteratively solves the inverse problem by updating the photon-density wave using the finite difference method, computing the weight matrix based on Born approximation, and reconstructing the absorption map using the fast iterative shrinkage-thresholding optimization algorithm (FISTA). We validate our method using both phantom and patient data and compare the results with those using the first order linear Born method. Phantom experiments demonstrate that the non-linear Born method provides more accurate target absorption reconstruction and better resolution than the linear Born method. Clinical studies on 20 patients show that non-linear Born reconstructs more realistic tumor shapes than linear Born, and improves the malignant-to-benign lesion contrast ratio from to , which is a improvement. For lesions approximately more than cm in diameter, the average malignant-to-benign lesion contrast ratio is increased from to , which is a improvement.