We present a theoretical framework to describe the effects of decoherence on matter waves in Talbot-Lau interferometry. Using a Wigner description of the stationary beam the loss of interference contrast can be calculated in closed form. The formulation includes both the decohering coupling to the environment and the coherent interaction with the grating walls. It facilitates the quantitative distinction of genuine quantum interference from the expectations of classical mechanics. We provide realistic microscopic descriptions of the experimentally relevant interactions in terms of the bulk properties of the particles and show that the treatment is equivalent to solving the corresponding master equation in paraxial approximation.