Multispectral Imaging (MSI) provides a sequence of en-face fundus spectral slices and allows for the examination of structures and signatures throughout the thickness of retina to characterize diabetic retinopathy (DR) lesions comprehensively. Manual interpretation of MSI images is commonly conducted by qualitatively analyzing both the spatial and spectral properties of multiple spectral slices. Meanwhile, there exist few computer based algorithms that can effectively exploit the spatial and spectral information of MSI images for the diagnosis of DR. This project proposes a new approach that can quantify the spatial spectral features of MSI retinal images for automatic DR lesion segmentation. It combines a generalized low-rank approximation of matrices (GLRAM) with a supervised regularization term (SRT) to generate low-dimensional spatial-spectral representations using the feature vectors in all spectral slices. Experimental results showed that the proposed approach is very effective for the segmentation of DR lesions in MSI images, which suggests it as an interesting tool for assisting ophthalmologists in diagnosing, analyzing, and managing DR lesions in MSI. This project is implemented with MATLAB software.