We propose and demonstrate a method of spatially overlapping diversity technology for wavefront sensing and image restoration with undersampled systems, which can handle extended objects illuminated by spatially incoherent light. The technique first scans a smaller subaperture across the large pupil of undersampled systems to generate several properly sampled images. Then, a nonlinear optimization method is used for joint reconstruction of wavefront and object. Simulations performed with different phase distributions initially validate the technique. Furthermore, an experimental configuration is established to measure the loaded defocus and wavefront transmitted through a plano-convex lens. A detailed analysis of experimental results is presented to demonstrate the effectiveness of this technique.