The estimation of direction of arrival (DOA) of a smart antenna is not able to perform high resolution in a mixed noise field with high correlation. In this paper, a modified multiple signal classification (MUSIC) algorithm based on spatial difference is proposed for improving the resolution of DoA estimation. The algorithm can eliminate the effect of mixed noise through computing the difference of the output signal covariance matrix and resolving the uncorrelated and coherent signal respectively. In order to obtain the orthogonal subspaces of the signal and noise, the Toeplitz decomposition and singular value decomposition (SVD) algorithm are applied to reconstruct the matrix. Accordingly, the MUSIC algorithm is adopted to estimate the DOA efficiently. In our research, several contrastive simulations corresponding to DOA estimation between the traditional MUSIC algorithm and the proposed method are implemented and analyzed. The results demonstrate the feasibility and high efficiency of our proposed algorithm.