In coherent optical time-domain reflectometry, external modulation is used to maintain the coherence of laser probe pulses launched into optical fibers. However, the residual continuous wave (CW) component produced by modulation may considerably degrade the system sensitivity. The backscattered signal from the pulse must be dominant compared to the CW signal. We discuss the effects of the finite extinction ratio (ER) on the instrument’s sensing range. A model analyzing the impact of the CW component on the backscattered signal as a function of the ER, fiber length, and pulse widths is proposed. It is also shown that acousto-optic modulation is more suitable than electro-optic modulation in optical fiber for longer distances. The results are confirmed experimentally in a 31–km-long fiber. A 1-Hz vibration was applied at 25.5 km, and the resulting signal-to-noise ratio of ∼13  dB was measured using 75-ns pulses. This result is in agreement with the performance predicted by the model.