The Microchannel Spatial Light Modulator (MSLM) is a versatile, highly-sensitive and optically-addressed modulator that is well suited for low-light-level, real time, optical information processing. It consists of a photocathode, a microchannel plate, a planar acceleration grid, and an electro-optic plate in proximity focus. The image processing operations that can be achieved with the MSLM include contrast reversal, contrast enhancement, edge enhancement, image addition and subtraction, analog and digital intensity level thresholding, and binary-level logic operations such as AND, OR, EXCLUSIVE OR and NOR. Recent prototype MSLMs have exhibited a half-wave exposure sensitivity of 2.2nJ/cm2, an optical information storage time of more than two months, and a framing rate of 20 Hz with full modulation depth (100 Hz with 20% modulation depth). The materials and device parameters that limit the ultimate performance of the modulator are discussed.