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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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MIC-Info: RSA-MD5,RSA,
 IQ6BiPV7T8l+Y3yFfALgiYupEoi6QDyMYNfD4UXNMzziKSKS/OLURvAlAKrGa/T4
 bexe6hAfGWcc6UKOtWhUgw==

<SEC-DOCUMENT>0001179110-08-000739.txt : 20080107
<SEC-HEADER>0001179110-08-000739.hdr.sgml : 20080107
<ACCEPTANCE-DATETIME>20080107151606
ACCESSION NUMBER:		0001179110-08-000739
CONFORMED SUBMISSION TYPE:	4
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20080102
FILED AS OF DATE:		20080107
DATE AS OF CHANGE:		20080107

ISSUER:		

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CREDENCE SYSTEMS CORP
		CENTRAL INDEX KEY:			0000893162
		STANDARD INDUSTRIAL CLASSIFICATION:	INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825]
		IRS NUMBER:				942878499
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1031

	BUSINESS ADDRESS:	
		STREET 1:		1421 CALIFORNIA CIRCLE
		CITY:			MILPITAS
		STATE:			CA
		ZIP:			95035
		BUSINESS PHONE:		408635-4300

	MAIL ADDRESS:	
		STREET 1:		1421 CALIFORNIA CIRCLE
		CITY:			MILPITAS
		STATE:			CA
		ZIP:			95035

REPORTING-OWNER:	

	OWNER DATA:	
		COMPANY CONFORMED NAME:			Holland Lori
		CENTRAL INDEX KEY:			0001302169

	FILING VALUES:
		FORM TYPE:		4
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-22366
		FILM NUMBER:		08514904

	BUSINESS ADDRESS:	
		BUSINESS PHONE:		408-919-1500

	MAIL ADDRESS:	
		STREET 1:		2584 JUNCTION AVENUE
		CITY:			SAN JOSE
		STATE:			CA
		ZIP:			95134
</SEC-HEADER>
<DOCUMENT>
<TYPE>4
<SEQUENCE>1
<FILENAME>edgar.xml
<DESCRIPTION>FORM 4 -
<TEXT>
<XML>
<?xml version="1.0"?>
<ownershipDocument>

    <schemaVersion>X0202</schemaVersion>

    <documentType>4</documentType>

    <periodOfReport>2008-01-02</periodOfReport>

    <notSubjectToSection16>0</notSubjectToSection16>

    <issuer>
        <issuerCik>0000893162</issuerCik>
        <issuerName>CREDENCE SYSTEMS CORP</issuerName>
        <issuerTradingSymbol>CMOS</issuerTradingSymbol>
    </issuer>

    <reportingOwner>
        <reportingOwnerId>
            <rptOwnerCik>0001302169</rptOwnerCik>
            <rptOwnerName>Holland Lori</rptOwnerName>
        </reportingOwnerId>
        <reportingOwnerAddress>
            <rptOwnerStreet1>CREDENCE SYSTEMS CORPORATION</rptOwnerStreet1>
            <rptOwnerStreet2>1421 CALIFORNIA CIRCLE</rptOwnerStreet2>
            <rptOwnerCity>MILPITAS</rptOwnerCity>
            <rptOwnerState>CA</rptOwnerState>
            <rptOwnerZipCode>95035</rptOwnerZipCode>
            <rptOwnerStateDescription></rptOwnerStateDescription>
        </reportingOwnerAddress>
        <reportingOwnerRelationship>
            <isDirector>1</isDirector>
            <isOfficer>0</isOfficer>
            <isTenPercentOwner>0</isTenPercentOwner>
            <isOther>0</isOther>
            <officerTitle></officerTitle>
            <otherText></otherText>
        </reportingOwnerRelationship>
    </reportingOwner>

    <nonDerivativeTable></nonDerivativeTable>

    <derivativeTable>
        <derivativeTransaction>
            <securityTitle>
                <value>Stock Option Right to Buy</value>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>2.43</value>
            </conversionOrExercisePrice>
            <transactionDate>
                <value>2008-01-02</value>
            </transactionDate>
            <transactionCoding>
                <transactionFormType>4</transactionFormType>
                <transactionCode>A</transactionCode>
                <equitySwapInvolved>0</equitySwapInvolved>
            </transactionCoding>
            <transactionAmounts>
                <transactionShares>
                    <value>4000</value>
                </transactionShares>
                <transactionPricePerShare>
                    <value>0</value>
                </transactionPricePerShare>
                <transactionAcquiredDisposedCode>
                    <value>A</value>
                </transactionAcquiredDisposedCode>
            </transactionAmounts>
            <exerciseDate>
                <footnoteId id="F1"/>
            </exerciseDate>
            <expirationDate>
                <value>2015-01-02</value>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>4000</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>68000</value>
                </sharesOwnedFollowingTransaction>
            </postTransactionAmounts>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </derivativeTransaction>
    </derivativeTable>

    <footnotes>
        <footnote id="F1">Option granted from 2005 Incentive Plan.  The option vests, subject to continuous service, at the rate of 25% of the total shares granted on April 1, 2008, April 1, 2009, April 1, 2010 and April 1, 2011.  The option expires seven (7) years from date of grant.</footnote>
    </footnotes>

    <ownerSignature>
        <signatureName>Byron Milstead for Lori Holland</signatureName>
        <signatureDate>2008-01-07</signatureDate>
    </ownerSignature>
</ownershipDocument>
</XML>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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