A differential detection method is proposed for M-ary spread spectrum signal process. The serial input data is converted into parallel data before M-ary differential encoding, M-ary spread spectrum modulation and carrier modulation. The influence of combination-correlation interference and the selection difficulty of M-ary spreading codes can be decreased by employing the presented Modified Cyclic Spreading Codes (MCSC). The MCSC is composed of three parts: cyclic prefix, the prototype spreading code and its cyclic postfix. The proposed receiver can achieve M-ary de-spread spectrum with only one chip SAWTDL device, which reduces the complexity of receiver effectively. Based on the coding rule, the interval between neighboring autocorrelation peaks loads the transmitted information which can be restored by M-ary differential decoding. The BER performances and data transmission capability of the system are analyzed. The conclusion drawn from computer simulation is identical with the theoretical analysis.