The principle of holographic confocal microscopy is introduced in this paper. An algorithm is presented to retrieve the phase information from the holograms and calculate the refractive index of the specimen from the phase. It is shown that this algorithm can be applied to a refractive index distribution in which the variation in x and z directions can be separated. The two examples used for the simulations are a linear gradient distribution and a circular distribution, which can be found in practical situations.