A method base on the techniques of pseudorandom code (PRC) phase modulation of the fiber laser and heterodyne detection to realize a high spatial resolution for the space-borne laser altimeter is proposed. The altimeter′s equation of the signal to noise ratio is deduced. The relations between the signal to noise ratio and range resolution with the laser transmit power, local oscillator power, telescope aperture, modulation rate and pseudorandom code length are numerically simulated. The relations between the parameters and the optimized parameters are obtained after the system analysis. Results show that the space-borne altimeter can achieve the design objective of the signal to noise ratio of 10, and the distance resolution of 15 cm when the transmit laser power is about 10 W, local oscillator power is about 10 mW, telescope aperture is 0.4 m, modulation rate is 1 GHz, and PRC length is about 300 μs in a single periodic time.