The principle and advantages of free-space optical communication technology based on modulating retro-reflector are introduced. The principles of corner cube modulating retro-reflector and cat-eye modulating retro-reflector are introduced. Different types of both modulating retro-reflectors and the characteristics of them are introduced, and then the technology of modulating retro-reflector in free-space optical communication is summarized. The applicaitons of modulating retro-reflector free-space optical communication are presented. The key technology and difficulty of modulating retro-reflector free-space optical communication are discussed, and the future applications of modulating retro-reflector free-space optical communication are prospected.