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The combination of space-time waveform encoding and digital beamforming (DBF) has been proposed as a novel concept to improve the performance of synthetic aperture radar (SAR) systems in the future. In this paper, we research one such new operational mode to reduce azimuth ambiguity in high-resolution wide-swath SAR image and present the processing scheme based on 2-D DBF for this mode. The main procedures and techniques are described in detail, and a complete mathematical derivation of the scheme is given; furthermore, a sample SAR system is provided, from which numerical simulation results are obtained to justify our derivations. In addition, an in-depth analysis of system performance associated with this mode, from the perspectives of both azimuth ambiguity-to-signal ratio (ASR) (AASR) and range ASR (RASR), is carried out. It is shown that a meaningful improvement of AASR can be attained at a small cost of raised RASR level, as compared with the performance of single-input multiple-output SAR.