We consider a model of preheating where the coupling of the
inflaton to the preheat field is modulated by an additional scalar
field which is light during inflation. We establish that such a model
produces the observed curvature perturbation analogously to the
modulated reheating scenario. The contribution of modulated preheating
to the power spectrum and to non-Gaussianity can however be
significantly larger compared to modulated perturbative reheating. We
also consider the implications of the current constraints on
isocurvature perturbations in case where the modulating field is
responsible for cold dark matter. We find that existing bounds on CDM
isocurvature perturbations imply that modulated preheating is unlikely
to give a dominant contribution to the curvature perturbation and that
the same bounds suggest constraints on non-Gaussianity and the amount
of primordial gravitational waves.