The invention discloses a phase sensitive optical time-domain reflectometer (phi-OTDR) sensing signal noise separation and signal extraction method, a longitudinal time sequence signal of each point of a phi-OTDR space is used as a processing object, multi-scale decomposition is performed for the time sequence signal by utilization of wavelet transforming, component signals in each scale are analyzed and reorganized in a selective mode, undulate background noise, acoustic waves and other time-varying interference signals are separated, real disturbance invasion signals are extracted, not only can undulate background noise be restrained, but also influences from other complicated time-varying interference noise are avoided, an invasion detection accuracy rate can be effectively improved, a system false alarm rate is reduced, detection performance of an invasion detection system based on a phi-OTDR in an actual complicated noise environment is improved, and significant application requirements in perimeter security, long-distance pipeline safety, large structure health monitoring and the like for a country can be met.