In this work, we introduce the concept of a hemispherical retro-modulator for the realization of passive free-space optical communication links. The hemispherical retro-modulator is implemented with a high-refractive-index glass (S-LAH79) hemisphere on a semi-insulating-InP (SI-InP) layer, whose thickness dictates the effectiveness of both retroreflection and modulation. A voltage is applied across transparent indium tin oxide (ITO) and gold (Au) films on either side of the SI-InP layer to bring about the desired modulation. The overall device is designed to enable low divergence on the retroreflected beam, as defined by a small divergence angle, and deep modulation on the retroreflected beam, as a result of electroabsorption in the SI-InP layer. To this end, the device is analysed with a ray-based model for retroflection and a unified Franz-Keldysh/Einstein model for modulation in the SI-InP layer. The theoretical results show strong agreement with the experimental results from our prototype. Moreover, the results show effective retroflection and deep modulation-with an applied electric field of 2.167 kV/cm yielding modulation depths of 13%, 34%, and 50% for our 980-nm photons and SI-InP layer thicknesses of 200, 600, and 1,000 µm, respectively. From this, we deem the SI-InP layer thickness of 600 µm to be optimal given its combined capabilities for retroflection and modulation. Ultimately, the introduced hemispherical retro-modulator is shown to be an effective element for future realizations of passive freespace optical communication links.