The level set technique is an implicit shape-based image reconstruction method that allows the recovery of the location, size and shape of objects of distinct contrast with well-defined boundaries embedded in a medium of homogeneous or moderately varying background parameters. In the case of diffuse optical tomography, level sets can be employed to simultaneously recover inclusions that differ in their absorption or scattering parameters from the background medium. This paper applies the level set method to the three-dimensional reconstruction of objects from simulated model data and from experimental frequency-domain data of light transmission obtained from a cylindrical phantom with tissue-like parameters. The shape and contrast of two inclusions, differing in absorption and diffusion parameters from the background, respectively, are reconstructed simultaneously. We compare the performance of level set recons uction with results from an image-based method using a Gauss-Newton iterative approach, and show that the level set technique can improve the detection and localisation of small, high-contrast targets.