Abstract: In order to detect underwater pipeline leakage and locate leakage points in real-time, an in-line distributed optical fiber sensor was developed based on the principle of Sagnac interferometers. The measuring principle and the leaking source location method for the detection system were analyzed. The effect of the pipeline pressure on the performance of the system was studied . The results verify that the system can obtain optimal performance when the pipeline pressure is more than 0.35MPa, and the error is less than 1.17%; the leakage points can not be located when the pressure is less than 0.35MPa. The conclusion is that the system can realize underwater pipeline leakage detection and locate leakage accurately when the pressure is more than 0.35MPa.