Confocal microscopes provide clear, thin optical sections with little disturbance from regions of the specimen that are not in focus. In addition, they appear to provide somewhat greater lateral and axial image resolution than with non-confocal microscope optics. To address the question of resolution and contrast transfer of light microscopes, a new test slide that enables the direct measurement of the contrast transfer characteristics (CTC) of microscope optics at the highest numerical aperature has been developed. With this new test slide, the performance of a confocal scanning laser microscope operating in the confocal reflection mode and the non-confocal transmission mode was examined. The CTC curves show that the confocal instrument maintains exceptionally high contrast (up to twice that with non-confocal optics) as the dimension of the object approaches the diffraction limit of resolution; at these dimensions, image detail is lost with non-confocal microscopes owing to a progressive loss of image contrast. Furthermore, we have calculated theoretical CTC curves by modelling the confocal and non-confocal imaging modes using discrete Fourier analysis. The close agreement between the theoretical and experimental CTC curves supports the earlier prediction that the coherent confocal and the incoherent non-confocal imaging mode have the same limit of resolution (defined here as the inverse of the spatial frequency at which the contrast transfer converges to zero). The apparently greater image resolution of the coherent confocal optics is a consequence of the improved contrast transfer at spacings which are close to the resolution limit.