We report gold nanoparticle based FRET assay to monitor the cleavage of DNA by nucleases. Fluorescence signal enhancement is observed by a factor of 120 after the cleavage reaction in the presence of S1 nuclease. The mechanism of distant dependent fluorescence quenching has been discussed. Our experimental results on distance dependent fluorescence quenching match quite well with theoretical findings obtained from the fluorescence quenching model by Gersten and Nitzan (Surf. Sci. 1985, 158, 165). Our experimental observation paradigm for the design of optical based molecular ruler strategies at distances more than double the distances achievable using traditional dipole-dipole Columbic energy transfer based methods.