Since an ultrasound field can easily be focused in tissue, ultrasound modulated optical imaging (UMOI), has been recently proposed. It is based on the hypothesis that, at the ultrasound focal point, the compression and rarefaction of tissue will generate a modulated optical signal which is related to the local optical and/or ultrasound properties. The mechanisms of ultrasound-light interaction in a highly scattering medium are not well described to date. Feasibility studies on UMOI are presented in this paper based on optical properties changes, diffraction pattern and speckle pattern changes caused by focused ultrasound in 5 cm breast tissue. We used diffusion theory to calculate the portion of incident fluence entering the ultrasound focal zone and the portion of modulated fluence from the focal zone reaching the detector. Effects of optical property and refractive index changes are investigated. Based on the statistic distribution of the speckle pattern, the probability function of detecting modulated signal has been derived. To verify the theory, an experiment system has been developed which includes an He-Ne laser, a focused ultrasound generator, a photomultiplier detector and bandpass filter, an rf lock-in amplifier, and a spectrum analyzer. Transmission measurements on a travamulsionTM aqueous phantom of 30 optical mean free path thickness can be obtained with the detector on axis with the laser beam, in which we believe only ballistic photons are detected.