Augmented reality (AR) applications require displays with an extended color gamut to facilitate the presentation of increasingly immersive content. The waveguide (WG) display technology, which is typical AR demonstration method, is a critical constraint on the color gamut of AR systems because of the intrinsic properties of the holographic optical elements (HOEs) used in this technology. To overcome this limitation, we introduce a method of spatially modulated diffractive optics that can expand the color gamut of HOE-based WG displays. This approach involves spatial modulation using sub-pixelized HOEs, which enables the diffraction of red, green, and blue rays along identical directions. The proposed structure considers both the characteristics of the HOE and the wavelength sensitivity of the observer to optimize the color gamut. Consequently, an expanded color gamut was achieved. The results of the theoretical and experimental analyses substantiate the effectiveness and practicality of this method in enhancing the color gamut of HOE-based WG displays. Thus, the proposed method can facilitate the implementation of more immersive AR displays.