Abstract: Based on the principle of Mach-Zehnder and Sagnac hybrid interferometer, the simulated experiment of urban gas pipeline leakage monitoring was carried out using distributed optical fiber sensor. Firstly, the method of wavelet packet energy spectrum extraction and the absolute distance method were combined to process the interference signals caused by pipeline leakage when measuring optic fiber length are 4 km and 6 km. Then the gas pipeline leakage was located according with the frequency spectrograms. Finally, the false alarm rate(FAR) of the distributed optical fiber system was analyzed.The results show that the FAR of proposed method reduces by 8.475%, compared with the traditional zero frequency spectrum localization method, it can more accurately identify the gas pipeline leak or not, thereby enhancing the reliability of system monitoring and positioning.