In order to demonstrate and to quantitatively evaluate the wavefront correction capabilities of a spatial light modulator (SLM) for optical imaging enhancement in Adaptive Optics (AO) a compact and flexible demonstration system and test bed has been developed. It basically consists of a projection system, where image objects of different complexity and spatial resolution can be implemented and imaged through Adaptive Optics onto a CCD camera. Furthermore, static and dynamic wavefront errors of different severeness can be introduced by means of fixed and rotating phase plates. With this system for the first time the optical performance of the Fraunhofer IPMS 240 × 200 micro mirror SLM for highresolution wavefront control has been characterized. For an incoherent or partially coherent imaging as employed in this case the image quality normally is assessed in terms of the Modulation Transfer Function (MTF). Therefore, a quantitative evaluation has been carried out by measuring the system MTF including the SLM for a number of spatial frequencies as well as for a variety of different complex aberrations without and with applied correction. Besides a description of the system set-up the obtained results on the imaging improvement and MTF measurement are presented.© (2007) COPYRIGHT SPIE--The International Society for Optical Engineering. Downloading of the abstract is permitted for personal use only.