The development of diffuse optical tomography as a functional imaging modality has relied largely on the use of model-based image reconstruction. The recovery of optical parameters from boundary measurements of light propagation within tissue is inherently a difficult one, because the problem is nonlinear, ill-posed and ill-conditioned. Additionally, although the measured near-infrared signals of light transmission through tissue provide high imaging contrast, the reconstructed images suffer from poor spatial resolution due to the diffuse propagation of light in biological tissue. The application of model-based image reconstruction is reviewed in this paper, together with a numerical modelling approach to light propagation in tissue as well as generalized image reconstruction using boundary data. A comprehensive review and details of the basis for using spatial and structural prior information are also discussed, whereby the use of spectral and dual-modality systems can improve contrast and spatial resolution.