The invention discloses a wavelet difference algorithm-based cable fault localization method. The method comprises the following steps of: 1, detecting a signal in real time and synchronously uploading the signal; 2, performing signal acquisition; 3, performing cable fault localization by steps of performing signal pre-treatment which comprises normalization treatment, de-noising treatment and fault signal modulus transformation, judging a wavelet packet entropy fault region, determining the fault point by selecting a one-dimensional signal, performing wavelet transformation, solving a wavelet coefficient, detecting a modulus maximum point, sorting singular points after the maximum point, performing first-order difference operation and difference comparison, and performing localization operation on the cable fault position by using a single-end fault localization method free from influence of the wave velocity; and 4, synchronously outputting the treatment result. The method has the advantages of reasonable design, simple operation, convenient implementation and high localization precision, and effectively solves the practical problems that the fault region cannot be identified and the localization precision is relatively low and easily influenced by various factors in the conventional cable fault detection method.