Unveiling the heterogeneity in the tissues is crucial to explore cell-cell interactions and cellular targets of human diseases. Spatial transcriptomics (ST) supplies spatial gene expression profile which has revolutionized our biological understanding, but variations in cell-type proportions of each spot with dozens of cells would confound downstream analysis. Therefore, deconvolution of ST has been an indispensable step and a technical challenge toward the higher-resolution panorama of tissues. Here, we propose a novel ST deconvolution method called SD2 integrating spatial information of ST data and embracing an important characteristic, dropout, which is traditionally considered as an obstruction in single-cell RNA sequencing data (scRNA-seq) analysis. First, we extract the dropout-based genes as informative features from ST and scRNA-seq data by fitting a Michaelis-Menten function. After synthesizing pseudo-ST spots by randomly composing cells from scRNA-seq data, auto-encoder is applied to discover low-dimensional and non-linear representation of the real- and pseudo-ST spots. Next, we create a graph containing embedded profiles as nodes, and edges determined by transcriptional similarity and spatial relationship. Given the graph, a graph convolutional neural network is used to predict the cell-type compositions for real-ST spots. We benchmark the performance of SD2 on the simulated seqFISH+ dataset with different resolutions and measurements which show superior performance compared with the state-of-the-art methods. SD2 is further validated on three real-world datasets with different ST technologies and demonstrates the capability to localize cell-type composition accurately with quantitative evidence. Finally, ablation study is conducted to verify the contribution of different modules proposed in SD2. The SD2 is freely available in github (https://github.com/leihouyeung/SD2) and Zenodo (https://doi.org/10.5281/zenodo.7024684). Supplementary data are available at Bioinformatics online.