The actual denoising effect of wavelet denoising methed was studied through pipe flow test apparatus, which simulated the actual pipeline leakage condition. The reason why small leak was not easy to be found was explained from two expects through timefrequency analysis of the leakage signal attenuation process. And the disadvantages of the most commonly used wavelet de-noising method to deal with small leakage signal were also discussed. On this basis, a new threshold function was established to improve the signal reconstruction accuracy and the advantage was analyzed mathematically. Next, a blind source separation algorithm based on maximum signal-to-noise ratio (SNR) was proposed, which integrated wavelet transform with blind source separation. By separating the known structural signal, the applicability of this method was illustrated, and the practical denoising effect and industrial application value of the fusion algorithm were verified.