The mechanism of hologram formation in dichromated gelatin is studied from all aspects with x-ray photoelectron spectroscopy (XPS). It is indicated that the Cr 2p(3/2) XPS spectrum of chromium used for hologram formation shows the property of exhibiting a continuous spectrum during the process of dichromated-gelatin hologram formation. By means of curve fitting and drawing a comparison between the obtained spectra and those of some standard substances, it is found that during the process of hologram formation the valence of chromium used for hologram formation changes from Cr6+ to a quasi-trivalent state to Cr4+, and finally to Cr3+. Accordingly, the corresponding compound experiences a change from (NH4)2Cr2O7 to the transient state close to the feature of Cr(OH)3 to CrO2, and finally to Cr3+, cross linking with the gelatin. The essence of the chemical change at different stages of the process of hologram formation was found, and so the present mechanism, which is determined with comparatively abundant proof, should replace previously reported mechanisms, which were too simple, varied, and sometimes even mutually contradictory. According to the experimental results and the fact that a solid-film reaction, which differs from that of the liquid-phase reaction, was studied, possible chemical-reaction equations of the process of hologram formation are established. This becomes the basis for explaining previous findings and expanding further research.