Rotating holographic toy

A toy for producing a three dimensional aesthetically pleasing illuminated image. The toy includes a handle, a light source, a rotary drive mechanism, and a plate-like member having an outer surface at least a portion of which is a holographic diffraction surface. The plate-like member is arranged to be rotated about a longitudinal axis so that light received by the holographic diffraction surface produces an aesthetically pleasing illuminated three-dimensional image. The plate-like member can be mounted so that it moves along the axis with respect to the handle as it is rotated and can include a transparent sphere containing a three dimensional object, e.g., a cartoon character, therein.