A polychromatic correlation detection technique by spectral-spatial matched filtering is described. This technique utilizes a diffraction grating and three collinear coherent sources. The technique for large capacity spatially multiplexing matched filter synthesis is also described. This technique offers true color signal detection, which is very suitable for color image recognition and identification. We also propose a real-time polychromatic image correlator for incoherent imaging. Several interesting experimental demonstrations of this color signal correlation detection scheme are provided. We note that this color signal detection technique will offer a wide range of applications for real-time color image recognition and identification, which is a step closer to the actual human perception system.