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The measurement of an extremely small magneto-optical polarization rotation angle with high sensitivity is integral to many scientific and technological applications. In this Letter, we have presented a technique based on Faraday modulation combined with the optical differential method to measure an extremely small polarization rotation angle with high sensitivity. The theoretical and experimental results show that common mode noise is reduced appreciably and signal to noise ratio is enhanced. The effectiveness of this technique has been demonstrated by measuring the Verdet constant of terbium gallium garnet glass and measuring the small polarization rotation angle. A sensitivity of enhancement of one order of magnitude has been achieved using differential detection based on Faraday modulation.