Volume holographic storage in photorefractive Bit 2S i020 (BSO) crystals is utilized to perform dynamic incoherent-to-coherent image conversion by means of selective spatial erasure of a uniform grating with white (or quasi-monochromatic) light. Physical characterization of device performance is de-scribed, with emphasis on resolution, sensitivity, and temporal response. The photorefractive incoherent-to-coherent optical conversion process is analyzed in terms of a simple model that relates the diffracted intensity to the space-variant effective modulation ratio.