Lack of mutual occlusion capability between computer-rendered and real objects is one of fundamental problems for most existing optical see-through head-mounted displays (OST-HMD). Without the proper occlusion management, the virtual view through an OST-HMD appears "ghost-like", floating in the real world. To address this challenge, we have developed an innovative optical scheme that uniquely combines the eyepiece and see-through relay optics to achieve an occlusion-capable OST-HMD system with a very compelling form factor and high optical performances. The proposed display system was based on emerging freeform optical design technologies and was designed for highly efficient liquid crystal on silicon (LCoS) type spatial light modulator (SLM) and bright Organic LED (OLED) microdisplay. The proposed display technology was capable of working in both indoor and outdoor environments. Our current design offered a 1280×1024 color resolution based on 0.8″ microdisplay and SLM. The MTF values for the majority of the fields at the cutoff frequency of 40lps/mm, which is determined by the pixel size of the microdisplay, are better than 15%. The design achieved a diagonal FOV of 40 degrees, 31.7 degrees horizontally and 25.6 degrees vertically, an exit pupil diameter of 8mm (non-vignetted), and an eye clearance of 18mm. The optics weights about 20 grams per eye. Our proposed occlusion capable OST-HMD system can easily find myriads of applications in various military and commercial sectors such as military training, gaming and entertainment.