Due to the correlated nature of diffused light, the problem of reconstructing optical properties using diffuse optical tomography (DOT) is ill-posed. US-, MRI- or x-ray-guided DOT approaches can reduce the total number of parameters to be estimated and improve optical reconstruction accuracy. However, when the target volume is large, the number of parameters to estimate can exceed the number of measurements, resulting in an underdetermined imaging model. In such cases, accurate image reconstruction is difficult and regularization methods should be employed to obtain a useful solution. In this manuscript, a simple two-step reconstruction method that can produce useful image estimates in DOT is proposed and investigated. In the first step, a truncated Moore-Penrose Pseudoinverse solution is computed to obtain a preliminary estimate of the image that can be reliably determined from the measured data; subsequently, this preliminary estimate is incorporated into the design of a penalized least squares estimator that is employed to compute the final image estimate. By use of phantom data, the proposed method was demonstrated to yield more accurate images than those produced by conventional reconstruction methods. The method was also evaluated with clinical data that included 10 benign and 10 malignant cases. The capability of reconstructing high contrast malignant lesions was demonstrated to be improved by use of the proposed method.