An optical image feedback system utilizing a cavity with a phase-conjugate mirror (PCM) has been studied. A new theory, based on operators, is developed to describe the steady-state output of the cavity. The use of operators allows one to describe the various optical operations and transformations needed in the optical implementation of iterative algorithms. The characteristics of the cavity are discussed using an expansion of the cavity fields in the cavity eigenfunctions. Several image processing applications using a PCM cavity are proposed and are studied using computer simulations. These theoretical studies indicate that a PC11 cavity can be useful in many applications. Optical phase conjugation was realized using a single crystal of photorefractive BaTi0₃ in a degenerated four-wave mixing geometry. The reflectivity gain from the PCM was optimized experimentally by the geometrical parameters and by the beamintensity ratios. The ability of the PCM to remove phase distortion as predicted theoretically, was demonstrated experimentally. The output of a PCM cavity can be substantially influenced by self-oscillations of the cavity above threshold. This was experimentally studied by observing the time evolution of the input. To avoid the influence of self-oscillation, the cavity must be operated below threshold. It is found that the cavity decay time constant diverges at and about threshold. This can be used as an indicator to show whether the cavity has crossed the threshold or to measure how close to threshold the cavity operates. To verify that a PCM cavity can be used in iterative image processing, an experiment was set up to implement an image restoration scheme based on the Gerchberg algorithm. It is shown that an optical implementation of the Gerchberg algorithm is feasible for objects made of few pixels. The experiment confirmed .that image iteration in a PCm cavity is possible. The limitations of the cavity and the technical difficulties are discussed. / Ph. D.