We report low resolution near infrared spectroscopic observations of the eruptive star FU Orionis using the Integral Field Spectrograph Project 1640 installed at the Palomar Hale telescope. This work focuses on elucidating the nature of the faint source, located 0.5" south of FU Ori, and identified in 2003 as FU Ori S. We first use our observations in conjunction with published data to demonstrate that the two stars are indeed physically associated and form a true binary pair. We then proceed to extract J and H band spectro-photometry using the damped LOCI algorithm, a reduction method tailored for high contrast science with IFS. This is the first communication reporting the high accuracy of this technique, pioneered by the Project 1640 team, on a faint astronomical source. We use our low resolution near infrared spectrum in conjunction with 10.2 micron interferometric data to constrain the infrared excess of FU Ori S. We then focus on estimating the bulk physical properties of FU Ori S. Our models lead to estimates of an object heavily reddened, A_V =8-12, with an effective temperature of ~ 4000-6500 K . Finally we put these results in the context of the FU Ori N-S system and argue that our analysis provides evidence that FU Ori S might be the more massive component of this binary system