The present invention aims to provide a method of producing a powdered hydrophilic modified polyrotaxane, which enables production of a powdered hydrophilic modified polyrotaxane excellent in storage stability in an industrially advantageous way. The present invention provides a method of producing a powdered hydrophilic modified polyrotaxane, comprising: a hydrophilic modification step of preparing a solution of a hydrophilic modified polyrotaxane by modifying all or part of hydroxy groups on a cyclodextrin of a polyrotaxane with hydrophilic modifying groups, the polyrotaxane containing the cyclodextrin, a polyethylene glycol included in the cavities of the cyclodextrin molecules in a skewered manner, and a capping group that is placed at each end of the polyethylene glycol and prevents dissociation of the cyclodextrin molecules from the polyethylene glycol; and a drying step of spraying the prepared solution of the hydrophilic modified polyrotaxane and drying the solution of the hydrophilic modified polyrotaxane in a heated gas stream.