The linear Faraday effect is used to implement a continuous measurement of the spin of a sample of laser cooled atoms trapped in an optical lattice. One of the optical lattice beams serves also as a probe beam, thereby allowing one to monitor the atomic dynamics in real time and with minimal perturbation. A simple theory is developed to predict the measurement sensitivity and associated cost in terms of decoherence caused by the scattering of probe photons. Calculated signal-to-noise ratios in measurements of Larmor precession are found to agree with experimental data for a wide range of lattice intensity and detuning. Finally, quantum backaction is estimated by comparing the measurement sensitivity to spin projection noise, and shown to be insignificant in the current experiment. A continuous quantum measurement based on Faraday spectroscopy in optical lattices may open up new possibilities for the study of quantum feedback and classically chaotic quantum systems.