A novel speckle reduction technique based on soft thresholding of wavelet coefficients using interval type II fuzzy system was developed for reducing speckle noise in Optical Coherence Tomography images. The proposed algorithm is an extension of a recently published method for filtering additive Gaussian noise by use of type I fuzzy system. Unlike type I, interval type II fuzzy based thresholding filter considers the uncertainty in the calculated threshold and the wavelet coefficient is adjusted based on this uncertainty. A single parameter controls the signal-to-noise (SNR) improvement. Application of this novel algorithm to optical coherence tomograms acquired in-vivo from a human finger tip show reduction in the speckle noise with little edge blurring and image SNR improvement of about 10dB. Comparison with adaptive Wiener and adaptive Lee filters, applied to the same image, demonstrated the superior performance of the fuzzy type II algorithm in terms of image metrics improvement.