The low signal-to-noise ratio of photon counting limited its application in the filed of Optics Time Domain Reflection (OTDR) because of the quantum fluctuation. We presented a method using photon counting modulation spectroscopy in OTDR with single photon detection at 1.55 μm. It is found that the noise amplitude of the quantum fluctuation has a uniform distributing in the frequency domain. The effect from quantum fluctuation has been effectively restrained by using the photon counting modulation and demodulated with lock-in amplifier. The enhancement of signal-to-noise ratio can be achieved by using setting the filter bandwidth via changing the integration time of the lock-in amplifier. Compared with the direct photon counting measurement, the signal-to-noise improvement ratio could reach 28.3 dB.