Fast Fourier transform (FFT), iteration, and least-squares fit are combined to form an image-processing system for the analysis of a carrier-coded fringe pattern. Only one coded fringe pattern is needed for extracting unambiguous information. The coded fringe pattern is first two-dimensionally FFT filtered to produce an initial coded phase with the carrier phase in it. Several phase iterations are carried out if necessary to improve the coded phase. The least-squares-fit technique is used to obtain a pure carrier phase. Then the carrier is removed by subtracting the pure carrier phase from the coded phase. The algorithm offers an improvement over the Fourier-transform method reported in the literature. A program is designed to execute the algorithm, and the processing is automated by a personal computer with an image board. Theory and applications of speckle interferometry and three-dimensional contouring are presented.