We present a two-step diffraction method for an optical 360∘ cylindrical holographic display with a planar spatial light modulator (SLM) and a 45∘ conical mirror. The first step involves layered diffraction of the cylindrical object surface to obtain the complex amplitude distribution on the conical mirror, and the second step is the coordinate transformation, followed by plane-to-plane diffraction to finally obtain the hologram. Numerical simulations and optical experiments show that our proposed method offers improved accuracy in the propagation process compared with the previous method; furthermore, it enables better quality of reconstruction, particularly at large radius of object surface. We believe it is a solid step toward practicality for a cylindrical holographic display.