A new distributed optical fiber pipeline leakage detection technology based on Mach-Zehnder optical fiber interferometer theory is put forward. When using this technology, an optical fiber cable is laid along the pipeline. Noise from leaking point on the pipeline can be acquired by the optical fiber vibration sensor which was composed of three single mode optical fibers, thus, leakage occurred on the pipeline can be detected in real time. The detection principle and system construction are explained and in-site testing data is analyzed. With principle analysis and experimental results, it is demonstrated that the detection system’s measuring sensitivity and location accuracy for detecting leakage are high when adopting this technology.