Measuring protein dynamics in the plasma membrane can provide insights into the mechanisms of receptor signaling and other cellular functions. To quantify protein dynamics on the single molecule level over the entire cell surface, sophisticated approaches such as single particle tracking (SPT), photo-activation localization microscopy (PALM) and fluctuation-based analysis have been developed. However, analyzing molecular dynamics of fluorescent particles with intermittent excitation and low signal-to-noise ratio present at high densities has remained a challenge. We overcame this problem by applying spatio-temporal image correlation spectroscopy (STICS) analysis to photo-activated (PA) microscopy time series. In order to determine under which imaging conditions this approach is valid, we simulated PA images of diffusing particles in a homogeneous environment and varied photo-activation, reversible blinking and irreversible photo-bleaching rates. Further, we simulated data with high particle densities that populated mobile objects (such as adhesions and vesicles) that often interfere with STICS and fluctuation-based analysis. We demonstrated in experimental measurements that the diffusion coefficient of the epidermal growth factor receptor (EGFR) fused to PAGFP in live COS-7 cells can be determined in the plasma membrane and revealed differences in the time-dependent diffusion maps between wild-type and mutant Lck in activated T cells. In summary, we have developed a new analysis approach for live cell photo-activation microscopy data based on image correlation spectroscopy to quantify the spatio-temporal dynamics of single proteins.