Compact color holograms combined with illumination that reconstruct the images at the ideal angle are fabricated. The edge-illumination method that reconstructs a hologram through an edge of the glass cover plate is applied. The image blur of the hologram reconstructed with white light is theoretically analyzed and quantitatively confirmed by experimental results. It is found that the rainbow hologram is superior to other white-light reconstruction holograms in image sharpness. Based on this analysis, a method for recording edge-illuminated rainbow color holograms is described.