Optical data storage is an alternative to magnetic disk data storage. Currently data access times are extremely slow for magnetic disks when compared to the speed of execution of CPUs so that any improvement in data access speeds will greatly increase the capabilities of computers, especially with large data and multimedia files. Optical memory is a technology that uses a three dimensional medium to store data and it can access such data a page at a time instead of sequentially, which leads to increases in storage density and access speed. Optical data storage systems are very close to becoming economically feasible. Photo-refractive crystals and photopolymers have been used successfully in experimental optical data storage systems. Such systems exploit the optical properties of these photosensitive materials along with the behavior of laser light when it is used to record an image of an object. Optical memory lies between main memory magnetic disk in regards to data access times, data transfer rates, data storage density. As processors and buses roughly double their data capacity every three years (Moore’s law), data storage has struggled to close the gap. CPUs can perform an instruction execution every nanosecond, which is six orders of magnitude faster than a single magnetic disk access. As the computer evolves, so do the applications that computers are used for. Recently large binary files containing sound or image data have become commonplace, greatly increasing the need for high capacity data storage and data access. A new high capacity form of data storage must be developed to handle these large files quickly and efficiently Optical memory uses the basic principles of holography for the recording purposes and hence it is also called as holographic memory system. Optical memory is a promising technology for data storage because it is true three dimensional storage system, data can be accessed an entire page at a time instead of sequentially, and there are very few moving parts so that the limitations of mechanical motion are minimized. Optical memory uses a photosensitive material to record interference patterns of a reference beam and a signal beam of coherent light, where the signal beam is reflected off of an object or it contains data in the form of light and dark areas. The nature of the photosensitive material is such that the recorded interference pattern can be reproduced by applying a beam of light to the material that is identical to the reference beam. The resulting light that is transmitted through the medium will take on the recorded interference pattern and will be collected on a laser detector array that encompasses the entire surface of the holographic medium. Many holograms can be recorded in the same space by changing the angle or the wavelength of the incident light. An entire page of data is accessed in this way. Currently, optical memory techniques are very close to becoming technologically and economically feasible. The major obstacles to implementing optical data storage are recording rate, pixel sizes, laser output power, degradation of holograms during access, temporal decay of holograms, and sensitivity of recording materials. At an estimated cost of between $161and $236 for a complete optical memory system, this may become a feasible alternative to magnetic disk in the near future.