It is crucial to characterize optical properties of nanomaterials for application and development of nanotechnology. Specifically, instead of averaging the observation across a large number of particles, measuring the spectra of a single nanoparticle has recently gained considerable attention, which can accurately and quantitatively analyze itself and its surrounding environment. Among various near-field and far-field approaches, the spatial modulation spectroscopy (SMS) technique can be employed to determine the extinction cross-section spectra using a high signal-to-noise ratio. In this paper, we introduce the modulation scheme, approach development, applications, and the latest research progress of SMS technique, and discuss its prospect for the future application.