The distribution of a modulated squeezed state over a quantum channel is the basis for quantum key distribution (QKD) with a squeezed state. In this Letter, a modulated squeezed state is distributed over a lossy channel. The Wigner function of the distributed state is measured to observe the evolution of the quantum state over a lossy channel, which shows that the squeezing level and the displacement amplitude of the quantum state are decreased along with the increase of the channel loss. We also measure the squeezing level in the frequency domain by the frequency shift technique. The squeezing of the modulated squeezed state at the modulation frequency is observed in this way. The presented results supply a reference for a QKD with a squeezed state.