In-line digital holographic microscopy (DHM) provides three-dimensional images with large fields of view and depths of field and micrometer-scale resolution, using a compact, cost-effective, and stable setup. Here, we develop the theoretical background and experimentally demonstrate an in-line DHM based on a gradient-index (GRIN) rod lens. In addition, we develop a conventional pinhole-based in-line DHM with different configurations to compare the resolution and image quality of both GRIN-based and pinhole-based systems. We show that in a high-magnification regime, where the sample is positioned near a source that produces spherical waves, our optimized GRIN-based setup provides better resolution ( ∼1.38µm ). Furthermore, we employed this microscope to holographically image dilute polystyrene micro-particles with diameters of 3.0 and 2.0 µm. We investigated the effect of light source–detector and sample–detector distances on the resolution, by both theory and experiment. Our theoretical and experimental results are in good agreement.