An optical implementation of iterative fractional Fourier transform algorithm is proposed and demonstrated. In the proposed implementation, the phase-shifting digital holography technique and the phase-type spatial light modulator are adopted for the measurement and the modulation of complex optical fields, respectively. With the devised iterative fractional Fourier transform system, we demonstrate two-dimensional intensity distribution synthesis in the fractional Fourier domain and three-dimensional intensity distribution synthesis simultaneously forming desired intensity distributions at several multi-focal planes.