Spatial heterogeneity in the tumor microenvironment (TME) plays a critical role in gaining insights into tumor development and progression. Conventional metrics typically capture the spatial differential between TME cellular patterns by either exploring the cell distributions in a pairwise fashion or aggregating the heterogeneity across multiple cell distributions without considering the spatial contribution. As such, none of the existing approaches has fully accounted for the simultaneous heterogeneity caused by both cellular diversity and spatial configurations of multiple cell categories. In this article, we propose an approach to leverage spatial entropy measures at multiple distance ranges to account for the spatial heterogeneity across different cellular organizations. Functional principal component analysis (FPCA) is applied to estimate FPC scores which are then served as predictors in a Cox regression model to investigate the impact of spatial heterogeneity in the TME on survival outcome, potentially adjusting for other confounders. Using a non-small cell lung cancer dataset (n = 153) as a case study, we found that the spatial heterogeneity in the TME cellular composition of CD14+ cells, CD19+ B cells, CD4+ and CD8+ T cells, and CK+ tumor cells, had a significant non-zero effect on the overall survival (p = 0.027). Furthermore, using a publicly available multiplexed ion beam imaging (MIBI) triple-negative breast cancer dataset (n = 33), our proposed method identified a significant impact of cellular interactions between tumor and immune cells on the overall survival (p = 0.046). In simulation studies under different spatial configurations, the proposed method demonstrated a high predictive power by accounting for both clinical effect and the impact of spatial heterogeneity.