In this paper, we establish the mathematical framework of a novel imaging technique, namely photo-magnetic imaging (PMI). PMI uses a laser to illuminate biological tissues and measure the induced temperature variations using magnetic resonance imaging (MRI). PMI overcomes the limitation of conventional optical imaging and allows imaging of the optical contrast at MRI spatial resolution. The image reconstruction for PMI, using a finite-element-based algorithm with an iterative approach, is presented in this paper. The quantitative accuracy of PMI is investigated for various inclusion sizes, depths and absorption values. Then, a comparison between conventional diffuse optical tomography (DOT) and PMI is carried out to illustrate the superior performance of PMI. An example is presented showing that two 2 mm diameter inclusions embedded 4.5 mm deep and located side by side in a 25 mm diameter circular geometry medium are recovered as a single 6 mm diameter object with DOT. However, these two objects are not only effectively resolved with PMI, but their true concentrations are also recovered successfully.