Localization and determination of blood region parameters in skin tissue can serve as a valuable supplement to standard non invasive techniques, especially in accessing the degree of depth of burns on skin and for the classification of vascular malformations. Quantitative optical examination of skin local blood region requires the use of depth sensitive techniques and preferential probing for assessment of data from specific layers of skin tissue. This work incorporates the depth sensitivity of diffuse reflectance spectroscopy and optimal source to detector fiber separation for maximum reflectance collection efficiency from local blood region in skin. Monte Carlo simulation for diffuse reflectance was performed on a multi layered skin tissue model consisting of epidermis, perfused dermis and localized blood region. It was found that the slope of the spatially resolved reflectance curve plotted with respect to the source to detector separation distance in semi log scale varies with the depth of the local blood region at specific wavelengths corresponding to the absorption wavelengths of hemoglobin. From the depth information obtained from the spatially resolved reflectance data, the optimum source to detector separation (SDS) is determined for maximum collection efficiency from the chromophore layer. The results obtained from simulation suggest the design of a linearly variable source to detector separation probe for preferential analysis of the depth of a specific tissue layer and subsequent determination of optimal source to detector separation for extracting the layer information. © 2014 SPIE.