The pipeline leak detection and leak location problem have gotten extensive attention in the industry. In this paper, the distributed optical fiber sensing system is designed based on the heat supply pipeline. The data processing method of distributed optical fiber sensing based on LabVIEW is studied emphatically. The hardware system includes laser, sensing optical fiber, wavelength division multiplexer, photoelectric detector, data acquisition card and computer etc. The software system is developed using LabVIEW. The software system adopts wavelet denoising method to deal with the temperature information, which improved the SNR. By extracting the characteristic value of the fiber temperature information, the system can realize the functions of temperature measurement, leak location and measurement signal storage and inquiry etc. Compared with traditional negative pressure wave method or acoustic signal method, the distributed optical fiber temperature measuring system can measure several temperatures in one measurement and locate the leak point accurately. It has a broad application prospect.