A method combining pseudorandom modulation of the fiber laser and single-photon counting is proposed to realize a high spatial resolution for the space-borne laser altimeter. The detailed principle of detection is presented, and the equation of the signal-to-noise ratio for the altimeter is given. The relationships between the signal-to-noise ratio with the laser power and the receiving telescope aperture are numerically simulated. The relationships between the parameters and the optimized parameters are obtained after analysis. Results show that the space-borne altimeter can reach the signal-to-noise ratio of 10, and the distance resolution of 15 cm when the receiving telescope aperture is between 0.8 m and 1m, laser power is about 10 W, pseudorandom modulation pulse width is 600 μs, modulation frequency is 1 GHz. This system can meet the requirement of altimetric measurement under the condition of space-borne environment.