Diffuse reflectance (DR) spectroscopy is a simple, low-cost, and noninvasive modality with potential for distinguishing oral precancer. Recently, in an ex vivo study, the DR spectral ratio (R545/R575) of oxygenated hemoglobin bands at 545 and 575 nm was used for grading malignancy. This work presents the results of clinical trials conducted in 29 patients to detect oral precancer using this ratio. We use site-specific normal spectra from a group of 36 healthy volunteers for comparison with those of patients. Toward this, in vivo DR spectra from 14 anatomical sites of the oral cavity of healthy volunteers are recorded on a miniature fiber optic spectrometer with white light excitation. The R545/R575 ratio is lowest for healthy tissues and appears to increase with the grade of malignancy. As compared to scatter plots that use the mean DR ratio from all anatomical sites, those using site-specific data show improved sensitivity and specificity for early diagnosis and grading of oral cancer. In the case of buccal mucosa, using scatter plots of R545/R575 ratio, we obtain a sensitivity of 100% and specificity of 86% for discriminating precancer (dysplasia) from hyperplasia, and a sensitivity of 97% and specificity of 86% for discriminating hyperplasia from normal.