In this paper, a novel oil pipeline leakage detection system has been presented. A modified multi-scale wavelet transformation modulus maxima algorithm was used to detect and locate the singularity of the characteristic signal of oil pipeline. According to the singularity, the leakage point could be known. In order to promote the precision, an adaptive threshold wavelet packet algorithm be utilized to filter the noises, after denoising the essential singularity of signal would not loss. Through simulation experiments confirm the validity of these algorithms.